GST on 3 units ?

We are looking at a block of three units. Our plan is to holiday let them. Is this a
commercial residential premises (subject to GST) ?

Ive read thru the ATO info and plenty of forums but can't seem to find a solid answer.

Any help greatly appreciated

 

First have a read of s 195-1 of the GST Act
Then you might have to find the ATO's interpretation of subsection (f) under the definition.

 

Thanks Terry. It seems that it will not be a "commercial residential premises (subject to GST)".

link here - Annotated GST Act – s 195 – Dictionary

Any further comments or feedback appreciated.

 

How have you come to that conclusion?

 

Are they currently being run as a business by an owner who is registered for GST?
Were they being run as a business and now vacant?
Is the contract a standard Real Estate Institute Offer and Acceptance (many are GST inclusive)
Is it being advertised as $xx + GST?

#notlegaladvice but the answers to some of these questions will give information that may determine a better answer.

 

There is no mention or signs of GST on the contract. As far as I can tell the current owner is not registered for GST and they were running them as holiday lets and also using one for their own holidays. Contact looks standard.

This was the text from the gst act that makes me think its not a "commercial residential premises (subject to GST)".

From the GST Act – s 195 – Dictionary -
commercial residential premises means:

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

(b) premises used to provide accommodation in connection with a *school; or

(c) a *ship that is mainly let out on hire in the ordinary course of a *business of letting ships out on hire; or

(d) a ship that is mainly used for *entertainment or transport in the ordinary course of a *business of providing ships for entertainment or transport; or

(da) a marine at which one or more of the berths are occupied, or are to be occupied, by *ships used as residences; or

(e) a caravan park or a camping ground; or

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

 

It would be premature to make a decision based on the dictionary. Did you actually read the GST Act just in case the legislation had changed since it was cut n pasted on that website?

Short term holiday accommodation sounds like it might be similar to a hotel or boarding house.

Have you read GSTR 2012/6?

 

I just had a good read thru GSTR 2012/6 ! Fun, fun!!!
Its hard to get a final definitive answer. It seems a single holiday unit is not subject to gst, but how about 3?
I'll give the ATO a call in the morning and ask them.

 

You might need a private binding ruling.

 

Will it affect your investment decision?

 

Holiday lettings and short stay lettings are not ordinarily subject to GST as the premises are used for residential accommodation. Thus they are input taxed. The nature of the engagement between the occupant and operator must be considered. Is it a lease ? Is it a short stay agreement ? Under what state law is the occupancy governed ?

It would be quite difficult to obtain a ruling for three units in a common block that the supplies are taxable. And that the operator is entitled to an ABN if the income is passive investment income. A key element in GSTR 2012/6 and its companion considers matters like scale and many elements of the character of a hotel, motel and similar accommodation. Matters like meals, dining, laundry, daily changeover, onsite live in management and other staff etc are all factors.