Edited version of private advice

Authorisation Number: 1051614632204

Date of advice: 29 November 2019

Ruling

Subject: GST and Commercial residential Premises

Question

Will Entity A 's supply to Entity B be a taxable supply of accommodation in commercial residential premises in accordance with section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

The supply will satisfy all of the requirements section 9-5 of the GST Act.

The Premises will be operated in a way that is sufficiently similar to a hotel and the Premises will fall within paragraph (f) of the definition of commercial residential premises defined in section 195-1 of the GST Act. Therefore, the supply will not be an input taxed supply of residential premises due to the exclusion in subsection 40-35(1) of the GST Act.

Entity A's supply of the Premises to Entity B will be a taxable supply of accommodation in commercial residential premises under section 9-5 of the GST Act.

Relevant facts and circumstances

Entity A is registered for GST.

Entity B will lease the land for the accommodation village to Entity A.

Entity A will construct and establish a 'camp-style' accommodation village (the Premises) of approximately X individual rooms. There will also be other infrastructure including communal eating facilities, an onsite village office and recreational facilities.

Once construction is completed Entity A will supply Entity B with accommodation services which will include the operation and maintenance of the accommodation village.

Entity A will charge Entity B an accommodation charge for its provision of the accommodation services which will comprise both fixed and variable components.

Entity A has provided a masterplan of the village site.

Entity A has provided a representative floor plan for a room.

The accommodation village will be operated by Entity A on a commercial basis and in a business-like manner.

The accommodation village will have the capacity to provide accommodation to multiple (ie X), unrelated guests or residents at once in separate rooms.

The accommodation village will not be held out to the public generally, and accommodation will only be provided to Entity B employees and contractors and Entity A operational staff.

Providing accommodation to Entity B employees and contractors is the main purpose of the accommodation village.

The accommodation village will have an onsite village office to accept reservations, allocate rooms and perform or arrange services.

Entity A will be supplying the accommodation services to Entity B (and providing it to Entity B's employees and contractors) in its own right rather than as an agent.

Entity A will provide and / or arrange for residents to receive services and facilities including food services, cleaning services, laundry services, pest control services, recreational facilities services, ground maintenance services, maintenance services and works and breathalyser services. Entity A will also provide and/or arrange for residents to have access to recreation equipment and a Village Community Coordinator.

The residents will be Entity B employees or contractors, or Entity A operational staff who have their principal place of residence elsewhere. A small percentage of the residents (generally the Entity A operational staff - anticipated to be up to X of the X residents) will be based in the accommodation village for longer periods, however, none of the residents will enjoy an exclusive right to occupy any particular room in the accommodation village in the same way as a tenant would.

Residents will not have the right to restrict management's access to their rooms during their stay and authorised personnel will be able to enter and inspect rooms without providing notice. Employees and contractors will be required to abide by Village Rules.

No rooms will be offered to residents for a periodic term, and residents may be required to move between rooms as and when business circumstances change.

The rooms will be maintained by Entity A to an agreed standard (as agreed with Entity B) and as such the residents will not be responsible for any maintenance including the changing of light bulbs. While Entity A is required to report any wilful damage by a resident to Entity B, it is not required to document the condition of the room before a room is allocated or after the resident has vacated.

Entity A will be required under the agreement with Entity B to clean the rooms when residents vacate, as well as at other times during the resident's stay. There is no scope to charge an additional amount for this service.

Residents will not be permitted to alter part of their room, regardless of the duration of their stay.

Residents will not be permitted to keep pets in their rooms.

Telephone (where provided), electricity and gas (if required for hot water) will be supplied to each room and the resident will not be required to pay for this connection or subsequent usage.

The rooms will be furnished with standard bedroom items such as beds, desks and fridges, as well as a bathroom.

An arrangement (occupant loaning an amount to the operator together with other fees) will not exist between Entity A and the residents.

There will be no supplies of long term accommodation to which Division 87 of the GST Act may apply.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Subsection 40-35(1)