Edited version of private advice

Authorisation Number: 1052395862350

Date of advice: 13 May 2025

Ruling

Subject: GST - supply of accommodation in commercial residential premises

Question 1

Is your supply of accommodation in the cottages at a specified address, a supply of accommodation in commercial residential premised and therefore a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

Yes.

Section 40-35 of the GST Act provides that a supply of residential premises by way of lease, hire or licence (other than a supply of commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by an entity that owns or controls the commercial residential premises) is input taxed.

The phrase 'commercial residential premises' is defined in section 195-1 of the GST Act to include, amongst other things:

(a)           a hotel, motel, inn, hostel or boarding house; or

...

(f) anything similar to residential premises described in paragraphs (a) to (e).

As stated at paragraphs 11 and 42 of Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6), determining whether premises fall within either paragraph (a) or (f) of the definition of 'commercial residential premises', involves matters of impression and degree.

Based on the information provided, we consider that, on balance, the cottages are operated in a way similar to a motel as they display sufficient features to be characterised as being similar to a motel under paragraph (f) of the definition of commercial residential premises. The supplies of accommodation at the cottages are supplies of accommodation in commercial residential premises and therefore not input taxed under section 40-35 of the GST Act.

Accordingly, your supply of accommodation in the cottages is a taxable supply as it meets all the requirements of section 9-5 of the GST Act. That is:

•                     you supply the accommodation for consideration

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

•                     the accommodation is supplied in Australia

•                     you are registered for GST, and

•                     the supply is neither input taxed nor GST-free.

This ruling applies for the following period:

dd/mm/yyyy to dd/mm/yyyy

Relevant facts and circumstances

You are registered for GST.

You purchased X acres of land located at a specified address on a specified date.

At the time of the purchase, the property was an empty block. The intention was to build self-contained cottages to supply accommodation to travelling tourists. This intention has never changed.

You constructed X number of cottages and other structures on the land. The cottages were completed in a specified year.

The manager's residence was built on the property in a specified year. There is an garden on the property.

You provided an aerial image of the property showing the cottages and the manager's residence.

You began using the cottages for the purpose of supplying accommodation to tourists on a specified date. You have been supplying accommodation to tourists in all the cottages ever since.

The cottages are virtually mirror images of each other. Each cottage has X number of bedrooms, a full kitchen, living area, bathroom and laundry.

You provided a floor plan of the cottages.

Each cottage has a car parking area to accommodate X number of vehicles.

The reception is located in the manager's residence with reception signs displayed. The reception is open to the guests at all times.

The manager is almost always on hand to greet the guests and escort them to their cottage. If the manager is not on site, they will have arranged with the guests where they can access the entry key and often they will have someone on hand to assist the guests with whatever questions they may have.

You have recently completed a purpose-built structure on the property to provided specified services to the guests. You charge an additional fee for the supply of these services.

You provide a wide range of cooking condiments. In the refrigerator, you supply a range of food. You also supply a wide range of tea. Firewood is supplied and the fires are always prepared ready to light. In the bathroom, you provide shampoo, conditioner, body wash, soap, tissues and toilet paper. You also provide washing machine powder. These amenities are constantly replenished and are free of charge.

There are smart TVs in all cottages. Guests can log into any streaming service they may be a member of. All cottages have internet with unlimited downloads free of charge.

You provide the guests with linen. You generally have short stays and have never had a guest asking for linen to be changed. If this was to happen, you would accommodate them at no extra charge.

The cottages are cleaned after each stay. If a guest should require a clean during their stay, you do so at no extra charge.

You provide information to your guests in the guests' compendium.

Your cottages are maintained to a high level and repairs are rarely, if ever, required whilst a guest is in house. If, however, something is not working properly the manager can be contacted by phone at any time. The manager is responsible for inspection of the cottages and they undertake whatever is necessary to maintain them at a very high level.

The number of guests permitted in each cottage is X.

Your average occupancy period is X nights. You rarely have stays of more than X nights. During the off-peak season, guests can opt to stay a single night. During peak seasons you have an X-night minimum stay. The guests can choose to stay as long as they wish, however, you have never had stays that are more than X days.

You offer accommodation to the public all year round.

You advertise in a number of ways. You advertise on your personal website, and on commissionable websites ­ Online Travel Agents (OTAs). You also deal with numerous Inbound Tour Operators (ITOs).

Some bookings are made directly with you. These are usually through your personal website, or the guests may be return customers or via word of mouth.

Many of your bookings come through your channel manager. Bookings, cottage allocation and payment options can all be made through your channel manager. For your international bookings, many are made through your association and partnership with ITOs.

All the ITOs have differing business structures including how they receive funds. Certain ITOs will pay you depending on their individual policies while others require you to submit an invoice.

The amount that you charge for the accommodation depends on the time of the year and the length of stay. This can range from $X per night for X people for a X-night stay to $X for a single night.

If a guest books directly with you, you charge 50% deposit with the balance on arrival. If guests book through a third party, then payment options vary considerably.

For direct bookings you receive payments through your Eftpos machine direct into your account with the guest providing their credit card. If guests book through a third party, then again payments to you vary considerably. You may receive a virtual credit card which can only be accessed on or after a certain date or you may have to issue an invoice for payment.

If a guest has to cut their stay short, whether or not you charge them the full amount will depend on the reason. If a booking is made directly with you, you do not charge a cancellation fee.

The amount of time that you spend working on and in your business changes from day to day. You do not have set hours. Your workload changes depending on the number of guests you have, the time of the year and many other factors. You estimate on average X hours per week.

You engage the services of cleaners on a regular basis. How often you employ the cleaners depends on how busy you are. You usually employ a cleaner if you have more than X cottage to clean on any given day. The cleaners will usually take a little over X hours to clean a cottage - sometimes X hours.

You have been treating the supply of the accommodation at the cottages as taxable supplies and have been paying GST.

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