Edited version of private advice

Authorisation Number: 1051911099336

Date of advice: 2 November 2021

Ruling

Subject: GST and rental of premises

Question

Will the supply of accommodation in premises be input taxed pursuant to section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

This ruling applies for the following period:

2 November 202x to 1 November 202x.

Relevant facts and circumstances

You have no Australian Business Number (ABN) and are not registered for GST.

You own a property in Australia which is on acreage and contains a single house (guest house) that you rent to guests when you are not residing at the property.

The guest house contains numerous bedrooms; sitting, dining, billiards, library and media rooms; as well as a kitchen, multiple bathrooms/toilets, laundry and an outdoor entertainment area.

Guests are not supplied:

•                     food and meals.

•                     bar services - however, there is a bar (unstocked) in the billiards room for guests to use.

•                     laundry services -however, there is a laundry room for guests to use which has a washing machine, iron and ironing board.

•                     room services or beverages services.

The guest house is fully furnished and contains a TV, DVD player, stereo, Pay TV and complimentary Wi-Fi. Crockery is also included.

Clean linen (sheets and bath towels) are provided to guests at the start of their stay and included as part of the accommodation charge. The guest house is cleaned at the end of the stay only - it is not cleaned or serviced daily.

There is a cleaning fee/charge which is in addition to the accommodation charge.

No services are provided to, or arranged for, guests during their stay besides a pool which guests may use and complimentary Pay TV and Wi-Fi. No food supplies are left for guests to use during their stay besides tea, coffee, salt and pepper.

The guest house is managed by a licenced real estate agent located around 20km away from the property. The real estate agent accepts reservations, receives payments, manages bookings and responds to guests' queries.

The real estate agent does not allocate rooms in the guest house or perform any other services apart from those mentioned above. While the guest house has capacity to provide accommodation to multiple, unrelated guests or residents at once in separate rooms, the guest house is only made available to groups of guests (who may be unrelated but are known to reach other) under a single booking rather than under separate bookings.

The guest house is advertised as short-term accommodation on various websites.

Predominantly guests that stay in the guest house are travellers who have their principal place of residence elsewhere. Guests do however enjoy exclusive possession of and an exclusive right to occupy the entire guest house during the period of their stay.

The guest house can accommodate quite a few guests, who are either related or a group of friends. Most of the time, the guest house is booked for those attending weddings or family celebrations. Usually, guests stay on weekends and some have extended stays during the school holidays.

Guests are not allowed to make any alterations to the guest house and do not enter into any residential lease with you.

Direction to the property and key/access details are emailed to guests. There is no reception desk or reception area at the property, and there are no concierge services.

The guest house is not pet-friendly, is not used in connection with a school and is not part of a caravan park or camping ground.

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 section 40-35

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

Section 9-5 of the GST Act provides you make a taxable supply if:

•         you make the supply for consideration

•         the supply is made in the course or furtherance of an enterprise that you carry on

• the supply is connected with the indirect tax zone (essentially Australia), and
• you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

None of the GST-free provisions in the GST Act operate to make the rental of your guest house a GST-free supply.

It is therefore necessary to determine whether the rental of your guest house is an input taxed supply.

It is noted that you are not currently registered for GST. Should your only supplies be input taxed supplies of residential premises (rather than supplies of commercial residential premises, which are generally taxable), then you would also not be required to be registered for GST. This would be the case regardless of the income generated from such supplies, as input taxed supplies are not included in the calculation of turnover for GST purposes (refer to Divisions 23 and 188 of the GST Act).

Division 40 of the GST Act deals with input taxed supplies and section 40-35 of the GST Act (which deals with residential rent) relevantly provides as follows:

(1)  A supply of premises by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed if:

(a)  the supply is of *residential premises (other than a supply of *commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises); or

(b)  the supply is of *commercial accommodation and Division 87 (which is about long-term accommodation in commercial premises) would apply to the supply but for a choice made by the supplier under section 87-25.

(1A) ...

(2)  However:

(a)  The supply is input taxed only to the extent that the premises are to be used predominantly for residential accommodation (regardless of the term of occupation); and

(b)  ...

(* denotes a defined term in section 195-1 of the GST Act).

As seen from section 40-35 of the GST Act, it is necessary to determine whether or not you are supplying residential premises, and if so, whether what you are supplying are also commercial residential premises or accommodation in commercial residential premises provided to an individual where you either own or control the commercial residential premises.

If you are supplying residential premises to be used predominantly for residential accommodation, which are also not commercial residential premises, then your supplies will be input taxed. However, a supply by way of lease, hire or licence of commercial residential premises would generally be a taxable supply.

For completeness, it is noted that you are not supplying long-term accommodation as your guests only stay for short-term stays.

Residential premises

Section 195-1 of the GST Act provides that 'residential premises' means land or a building that: (a) is occupied as a residence or for residential accommodation; or (b) is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation; (regardless of the term of the occupation or intended occupation) and includes a floating home.

Goods and Services Tax Ruling 2012/5 Goods and services tax: residential premises (GSTR 2012/5), relevantly explains what is meant by 'residential premises' in the following paragraphs:

6. Premises, comprising land or a building, are residential premises under paragraph (a) of the definition of residential premises in section 195-1 where the premises are occupied as a residence or for residential accommodation, regardless of the term of occupation. The actual use of the premises as a residence or for residential accommodation is relevant to satisfying this limb of the definition.

7. Premises, comprising land or a building, are also residential premises under paragraph (b) of the definition of residential premises if the premises are intended to be occupied, and are capable of being occupied, as a residence or for residential accommodation, regardless of the term of the intended occupation. This limb of the definition refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the premises.

14. 'Residential premises' are not limited to premises suited to extended or permanent occupation. Residential premises provide 'living accommodation', which does not require any degree of permanence. It includes lodging, sleeping or overnight accommodation.

15. To satisfy the definition of residential premises, premises must provide shelter and basic living facilities. Premises that do not have the physical characteristics to provide these are not residential premises to be used predominantly for residential accommodation.

Further, paragraph 9 of GSTR 2012/5 provides that the requirement in section 40-35 of the GST Act that premises be 'residential premises to be used predominantly for residential accommodation (regardless of the term of occupation)' is to be interpreted as a single test that looks to the physical characteristics of the property to determine the premises' suitability and capability for residential accommodation.

In addition, paragraph 25 of GSTR 2012/5 provides that not all premises that possess basic living facilities are residential premises to be used predominantly for residential accommodation. If it is clear from the physical characteristics of the premises that their suitability for living accommodation is ancillary to the premises' prevailing function, the premises are not residential premises to be used predominantly for residential accommodation.

The following relevant paragraphs from GSTR 2012/5 discuss in more detail 'living accommodation provided by shelter and basic living facilities', 'other premises', and the importance of 'identifying the premises':

74. The ordinary meaning of the word 'residence' connotes a degree of permanent or long-term commitment to the occupation of premises. However, the Marana amendments broaden the definition of residential premises, ensuring that it is not limited to premises suited to extended or permanent occupation. The amendments included the words 'residential accommodation' and 'regardless of the term of occupation or intended occupation'. This gives 'residential premises' a broader meaning in the GST Act than they ordinarily have.

75. Residential premises, as defined in the GST Act, provide living accommodation. Living accommodation does not require any degree of permanence of occupation. It includes lodging, sleeping or overnight accommodation. In South Steyne Hotel Pty Ltd v. FC of T (South Steyne), Stone J referred to a number of overseas decisions on this point including Urdd Gobaith Cymru and Owen. Her Honour noted:

37.... [In Urdd Gobaith Cymru] The Tribunal chairman agreed that 'a residence' clearly implied a building with a significant degree of permanence of occupation but added:

However, the word loses that clear meaning when used as an adjective. In ordinary English 'residential accommodation' merely signifies lodging, sleeping or overnight accommodation. It does not suggest the need for such accommodation to be for any fixed or minimum period.

38.... In Owen the Court of Appeal expressed a similar view as to the meaning of 'residential accommodation' used in the context of the Capital Gains Tax Act 1979. The position was put succinctly by Leggat LJ who said:

In my judgment the expression 'residential accommodation' does not directly or by association mean premises likely to be occupied as a home. It means living accommodation, by contrast, for example with office accommodation.

76. In South Steyne it was held that only the elements of shelter and basic living facilities are necessary for premises to satisfy the definition of residential premises. This includes, for example, shelter and basic living facilities provided by a bedroom and bathroom. However, premises may provide shelter and basic living facilities without necessarily having a conventional bedroom or bathroom.

82. Contractual or legal prohibitions against long-term or short-term occupation as a residence do not prevent premises from being suitable for, and capable of, providing residential accommodation.

83. Before considering whether a supply of premises consists of residential premises, commercial residential premises, or another type of premises, it is necessary to identify the premises subject to the supply. In this context it is possible for premises to be part of larger land or a building. For example, if the subject of the supply is limited to a strata-titled room or apartment within a larger building, it is necessary to consider the character of that room or apartment, not the character of the larger building.

84. A variety of buildings may include basic living facilities, such as office buildings and hospitals. However, it does not follow that all premises that have these facilities are necessarily residential premises to be used predominantly for residential accommodation.

85. Although these premises have, in part, physical characteristics common to premises that provide living accommodation, they also have physical characteristics which reflect their suitability for another purpose. Where premises' suitability for the provision of living accommodation is ancillary to the premises' prevailing function, they are not residential premises to be used predominantly for residential accommodation.

87. These outcomes are consistent with the legislative policy. The legislative intention is that Subdivisions 40-B and 40-C operate so that those renting a house, flat or home unit are on the same footing as persons who own their own homes: neither is to bear the cost of GST in connection with such occupation. There is nothing to suggest that the legislative intention is that a supply of non-residential structures (such as a factory, warehouse or office) should be input taxed simply because someone occupies the premises when they are supplied, even if that person could be said to be living there.

88. Design or construction documents, such as architectural plans, may assist in identifying the physical characteristics of premises as residential premises to be used predominantly for residential accommodation where inspection of the physical characteristics of the premises does not give a clear indication. See Example 7 at paragraph 36 of this Ruling. This documentation may also be relevant in determining the intended character of premises before construction of the premises is completed.

Commercial residential premises

Section 195-1 of the GST Act also contains the definition of 'commercial residential premises'. That term is relevantly defined to mean a hotel, motel, inn, hostel or boarding house (in paragraph (a) of the definition), or anything similar to a hotel, motel, inn, hostel or boarding house (in paragraph (f) of the definition).

While paragraph (f) of the definition of commercial residential premises extends the scope of the definition, its operation is limited to premises that have some or all of the characteristics of both residential premises and one of the classes of premises listed in paragraphs (a) to (e) of the definition (refer to paragraph 143 of Goods and Services Tax Ruling 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6)).

Paragraphs 9 and 140 of GSTR 2012/6 relevantly provide that the terms in paragraph (a) of the definition of commercial residential premises are not defined within the GST Act and therefore take their ordinary meanings in context. The ordinary meanings of these terms can be found in paragraph 141 of GSTR 2012/6, which provides as follows:

'Hotel, motel, inn, hostel or boarding house - paragraph (a) of the definition'

The following meanings sourced from the Macquarie Dictionary 5th Edition, the Oxford English Dictionary 2nd and 3rd editions and the Shorter Oxford English Dictionary 5th Edition are relevant in interpreting the meaning of paragraph (a) of the definition:

Hotel

a building in which accommodation and food, and alcoholic drinks are available.

building or establishment where travellers or tourists are provided with overnight accommodation, meals and other services.

an establishment, esp. of a comfortable or luxurious kind, where paying visitors are provided with accommodation, meals and other services.

Motel

a roadside hotel which provides accommodation for travellers in self-contained, serviced units, with parking for their vehicles.

a hotel catering primarily for motorists; spec. on comprising self-contained accommodation with adjacent parking space.

Inn

a small hotel that provides lodging, food etc., for travellers and others.

a public house providing accommodation, refreshments, etc., for payment, esp. for travellers.

now also, a public house serving alcoholic liquor for consumption on the premises, whether providing accommodation or not.

Hostel

a supervised place of accommodation, usually supplying board and lodging provided at a comparatively low cost, as one for students, nurses, etc.

a public house of lodging and entertainment for strangers and travellers; an inn, a hotel.

a house of residence for students at a university or on a course, esp. at a non-residential college, or for some other special class of people.

Boarding house

a dwelling in which lodging is provided to paying residents who share common facilities such as a kitchen, laundry, living room, etc.

a dwelling, usually a private house, in which board and lodging are provided for payment.

a house offering board and lodging for paying guests.

In their ordinary meanings, these terms share the common attribute of providing accommodation to guests. Premises that are 'similar' to establishments that are commercial residential premises must have sufficient characteristics in common with one of the class of premises described above.

Paragraphs 10 and 142 of GSTR 2012/6 provide that objective factors that are relevant to characterising premises as falling within either paragraph (a) or (f) of the definition of commercial residential premises include the overall physical character of the premises and how the premises are operated. Where these objective factors do not give a clear characterisation, the following may also be considered:

•         contractual documentation that provides evidence of current or future use, and

•         government zoning and planning permissions.

The tests to be applied are whether the premises are a hotel, motel, inn, hostel or boarding house for the purposes of paragraph (a), or whether the premises are similar to these types of premises, in the sense that they have a sufficient likeness or resemblance to any of these types of establishments for the purposes of paragraph (f). These tests necessarily raise questions of fact involving matters of impression and degree (paragraphs 11 and 147 of GSTR 2012/6).

Common characteristics of operating hotels, motels, inns, hostels and boarding houses that are relevant, though not necessarily determinative, to characterising premises as commercial residential premises are set out in paragraph 12 of GSTR 2012/6, as follows:

•         Commercial intention

The premises are operated on a commercial basis or in a business-like manner even if they are operated by a non-profit body.

•         Multiple occupancy

The premises have the capacity to provide accommodation to multiple, unrelated guests or residents at once in separate rooms, or in a dormitory.

• Holding out to the public

The premises offer accommodation to the public or a segment of the public.

• Accommodation is the main purpose

Providing accommodation is the main purpose of the premises.

• Central management

The premises have central management to accept reservations, allocate rooms, receive payments and perform or arrange services. This can be provided through facilities on-site or off-site.

• Management offers accommodation in its own right

The entity operating the premises supplies accommodation in its own right rather than as an agent.

• Provision of, or arrangement for, services

Management provides guests and residents with some services and facilities or arranges for third parties to provide them.

• Occupants have the status of guests

Predominantly, the occupants are travellers who have their principal place of residence elsewhere. The occupants do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant.

Paragraphs 13 to 25 of GSTR 2012/6 discuss the features of hotels, motels and inns. Some of the comments made in these paragraphs include the following:

•         A motel is a particular type of hotel that primarily caters to the needs of motorists seeking roadside accommodation. An inn is a small hotel at which board (meals) and lodging are provided to travellers. Subject to these qualifications, the features below are equally relevant to motels and inns.

•         Hotels provide accommodation for a commercial purpose. Non-profit entities can also operate commercial residential premises.

•         Hotels have the capacity to supply accommodation for multiple occupancies.

•         Hotels usually offer meals to guests and they usually have a kitchen where meals are prepared. The premises usually include a restaurant or dining room. A motel does not necessarily have a dining room, but guests of the motel may still be provided meals.

•         The guest rooms in a hotel are invariably furnished. In some cases, hotel rooms may also have a kitchenette for self-catering.

•         Linen and towels are usually supplied. The rooms are usually cleaned and serviced by staff on a daily basis, with the costs of these services being included in the tariff.

•         Predominantly, the guests of hotels are travellers who ordinarily have their principal place of residence elsewhere. However, this feature may not be evident in hotels that provide accommodation to long-term residents for whom the premises are a permanent place of residence.

•         Guests of hotels do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant. The guest is usually charged at a daily rate.

•         Hotels usually have a reception desk to handle the requirements of both management and guests. Hotels may also offer concierge services.

•         Hotels do not normally provide shared accommodation to guests in the sense of having a number of unrelated guests sharing a kitchen and living facilities.

•         A hotel is centrally managed by the operator, typically having at least one person present, or offsite but readily accessible, to manage the accommodation and arrange or provide services.

•         Accommodation in a hotel is supplied by the operator of the hotel in its own right.

•         When determining whether premises are, or are similar to, a hotel, motel or inn, it is necessary to consider the premises in its entirety. It is not sufficient to only consider the features of part of the premises, such as an individual room, in which accommodation is provided.

Based on the definitions in paragraph 141 of GSTR 2012/6, a hotel, motel or inn is a building or establishment from which accommodation and other services or facilities are supplied. Broadly, accommodation falling into this category would have multiple occupancies such as a block of apartments, central management of the properties, and provision of services to the guests beyond the accommodation such as breakfast or room servicing.

The features of hostels and boarding houses are discussed in paragraphs 26 to 35 and 36 to 40 of GSTR 2012/6 respectively.

Essentially, the term 'hostel' includes premises that can be described as a hostel, a hotel or inn. The features of hotels and inns identified earlier are also relevant to hostels. Hostels also include supervised places of accommodation usually supplying board and lodging at a comparatively low cost. Hostel accommodation may be provided either in a dormitory environment or in separate bedrooms.

Physical characteristics of hostels may include a commercial kitchen where meals are prepared, a communal area suitable for a dining area for occupants, and a communal laundry; however, the provision of meals is not an essential feature of a hostel. The feature that a hostel, or premises similar to a hostel, be a supervised place of accommodation can be evident where occupants can raise queries and concerns pertaining to the management of the premises with an on-site manager.

A 'boarding house' is a dwelling at which board and lodging are provided to guests or residents. While the term indicates that the premises ordinarily consist of a single dwelling, premises are not precluded from being a boarding house where the premises consists of a building with an additional stand alone structure in which board (meals), or lodging, or both, is provided.

Paragraph 41 of GSTR 2012/6 provides that ultimately, whether premises are commercial residential premises is, a matter of overall impression involving the weighing up of all relevant factors.

Paragraphs 95, 96 and 98 of GSTR 2012/6, which discuss separately titled rooms, apartments, cottages or villas, relevantly provide as follows:

Separately titled rooms, apartments, cottages or villas

95. In addition to living accommodation areas, premises that are commercial residential premises include commercial infrastructure to support the commercial operation of the premises. This infrastructure may include (but is not limited to) reception areas, dining and bar areas, meeting/function areas, kitchens, laundry facilities, storage areas and car parks. This infrastructure is used to provide services to occupants. Premises described in paragraph (a) and similar premises under paragraph (f) of the definition contain some or all of these areas to some degree.

96. Separately titled rooms, apartments, or adjacent cottages or villas located on adjoining or abutting land can be combined with sufficient commercial infrastructure (as discussed in paragraph 95 of this Ruling) so that, as a whole, it can be operated similarly to a hotel, motel, inn, or hostel. Supplies of accommodation in premises operated in this way are supplies of accommodation in commercial residential premises.

98. A supply by sale or lease of real property consisting of part of a building cannot be characterised by reference to another supply. For example, a hotel may be strata titled so that each hotel room and the commercial infrastructure are separate strata units. Where the strata units are individually supplied under multiple sale contracts or leases, each individual supply of a strata unit must be characterised without reference to other supplies of strata units. A supply by sale or lease of strata titled rooms, apartments, cottages or villas without sufficient commercial infrastructure referred to at paragraph 95 of this Ruling is an input taxed supply of residential premises to be used predominantly for residential accommodation regardless of whether the building complex, or any part of it, is being, or will be, operated as commercial residential premises. ...

Although the abovementioned paragraphs from GSTR 2012/6 concentrate on separately titled rooms and cottages, etc., what is made clear in those paragraphs is that commercial residential premises must include sufficient commercial infrastructure before the supply of those premises can be that of commercial residential premises.

Thus, where residential accommodation is rented without sufficient commercial infrastructure, such supplies would be input taxed supplies of residential premises to be used predominantly for residential accommodation rather than taxable supplies of commercial residential premises.

Whereas a supply by way of rent of premises that display sufficient features to be characterised as commercial residential premises would be a taxable supply where the requirements of section 9-5 of the GST Act are satisfied.

How this applies to the facts in your case

The guest house that you rent to guests satisfies the definition of residential premises as it provides shelter and basic living facilities; including multiple bathrooms/toilets, multiple bedrooms, kitchen, multiple living spaces and laundry.

Regarding the question of whether the guest house is commercial residential premises, we note that while the guest house displays some characteristics of commercial residential premises, the guest house does not display sufficient features of a hotel, motel, inn, hostel or boarding house in the way that it is used to be characterised as commercial premises.

The accommodation that you provide has the following characteristics in common with hotels, motels, inns, hostels and boarding houses:

•         Commercial intention - although you contend that you do not operate the guest house as a 'business' (in that you do not provide any of the other services that a hotel or motel would provide), you would presumably make a profit from renting the guest house. You would also presumably keep records in relation to your activities (including records kept on your behalf by the real estate agent).

•         Holding out to the public - you offer accommodation to the public (with the guest house being marketed via a number of different online platforms).

•         Accommodation is the main purpose - providing accommodation is the main purpose of you renting the guest house even though the rent that you charge also covers the guests' complimentary use of Pay TV and Wi-Fi.

•         Management offers accommodation in its own right - you rent the guest house to guests in your own right (the real estate agent that you use for this acts on your behalf).

•         Occupants have status of guests - the guests that you rent to are people whose main place of residence is elsewhere. Guests do not enter into any residential lease with you in relation to their stay they cannot make any alterations or bring pets to the guest house.

However, the accommodation that you provide fails to have the following characteristics in common with hotels, motels, inns, hostels and boarding houses:

•         Multiple occupancy - you only rent a single guest house. Although the house has multiple bedrooms and is capable of providing accommodation to multiple guests at the one time, you only take a single booking for each stay (the group of guests covered each booking are either related to each other or known to each other).

•         Central management - there is no on-site central management for the guest house and there is no reception desk/area, nor are there concierge services. The real estate agent who accepts reservations, receives payments, managers bookings and responds to guests' queries on your behalf is not readily accessible, being located some 20 km away and having other properties to manage as well. Directions and key/access details are emailed to guests.

•         Provision of, or arrangement for services - although there is a pool as well as complimentary Pay TV and Wi-Fi for guests to use during their stay, you do not provide or arrange any services or meals for guests during their stay. Fresh linen is only provided at the start of a stay - it is not changed during a stay and the guest house is not cleaned or serviced during a stay. Guests pay a separate cleaning fee at the end of their stay.

Further, the guest house that you rent to guests is not similar to the dictionary definitions for a hotel, motel, inn, hostel and boarding house above, for the following reasons:

•         You do not provide food, alcoholic drinks and other services like a hotel - you only provide accommodation.

•         You do not provide roadside accommodation primarily for motorists like a motel - your guests are mostly groups who come to stay in a large house in a rural setting for weekends/during school holidays, or to attend weddings/other family celebrations.

•         You do not provide lodging and food, etc. for travellers and others like an inn (small hotel) - you only provide accommodation.

•         As part of the tariff, hotels, motels and inns usually provide linen and towels, plus clean and service the rooms on a daily basis. You do not clean and service the guest house daily (you only provide fresh linen at the start of a stay) and you charge guests a separate cleaning fee at the end of their stay.

•         You do not provide a supervised place of accommodation like a hostel - you only provide accommodation; you generally do not even meet your guests. Also, the guest house does not provide low cost accommodation like a hostel.

•         In general, you do not provide a dwelling in which lodging is provided to paying residents who share common facilities such as a kitchen, laundry, living room, etc. like that provided by a boarding house - at any one time, you rent the entire guest house to a group of family members or friends, etc. in a single booking. Your guests have the use of the entire guest house and prepare their own meals. You do not, for example, separately rent individual bedrooms in the guest house to people unknown to each other, who would then share the kitchen, living areas and laundry (in your case the laundry only contains a single washing machine).

Conclusion

As stated above, determining whether premises are commercial residential premises is a matter of overall impression and degree involving weighing up all relevant factors.

Taking all of the above into consideration, we have concluded that the accommodation that you provide when renting the guest house is not the supply of commercial residential premises. Such supplies are thus input taxed supplies of residential premises and not taxable supplies.

Please note that you will not be entitled to claim input tax credits for the GST included in costs to the extent that they relate to making supplies that would be input taxed supplies of residential premises.