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You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private advice

Authorisation Number: 1052082842842

Date of advice: 30 March 2023

Ruling

Subject: GST and nominal consideration

Question 1

Will the sub-lease from Entity A to Entity B be a GST-free supply pursuant to section 38-250 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the sub-lease by Entity A to Entity B will be considered GST-free provided that, using the proposed methodology in question 3, the supply is for consideration that is for less than 75% of the GST-inclusive market value of the supply.

Question 2

Will the sub-lease from Entity A to Entity C be a GST-free supply of accommodation pursuant to section 38-250 of the GST Act?

Answer

Yes, the sub-lease by Entity A to Entity C will be considered GST-free provided that, using the proposed methodology in question 3, the supply is for consideration that is for less than 75% of the GST-inclusive market value of the supply.

Question 3

For the purposes of the GST-free provisions in section 38-250 of the GST Act does the Commissioner agree with the proposed methods for determining the market value of supplies made by Entity A under the sub-lease to Entity C and the head lease to Entity B?

Answer

Yes, the Commissioner agrees with the proposed methodology for determining the market value of supplies of the residential premises.

Relevantly, the methodology has appropriately applied the 'same supply test' and/or the 'similar supply test' discussed in the Charities Consultative Committee, Non-commercial activities of charities, cost of supply and market value tests (Issues Register). According to paragraph 44 of the Issues Register charities need to take into account the following when making the comparison:

  • identifying the market
  • the locality of the supply or area of the market
  • the quality or nature of supply
  • the size, quantity or duration of supply
  • the conditions of supply
  • other charitable or commercial suppliers, and
  • the number of comparisons.

The proposed methodology effectively compares the same and/or similar types of residential premises for categorising the accommodation provided.

On this basis the Commissioner agrees with the proposed methodology for determining the market value of supplies of the residential premises.

This ruling applies for the following periods:

XX XXX XXXX to XX XXX XXXX

The scheme commences on:

XX XXX XXXX

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 38-250


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