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ATO Interpretative Decision

ATO ID 2003/976

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Issue

Does the entity, a «boarding» school that provides long-term accommodation to both staff and students in the same premises, include the number of students receiving GST-free student accommodation in calculating whether the premises used for staff accommodation are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Decision

Yes, the entity does include the number of students receiving GST-free student accommodation in calculating whether the premises used for staff accommodation are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the GST Act.

Facts

The entity is a «boarding» school. The entity supplies its staff with long-term commercial accommodation in its «boarding» house. The entity also makes supplies of long-term accommodation to students through its «boarding» house. The supplies of student accommodation are GST-free under subsection 38-105 of the GST Act.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Subsection 87-20(3) of the GST Act provides that commercial residential premises are predominantly for long-term accommodation if at least 70 per cent of the individuals who are provided with commercial accommodation in the premises are provided with commercial accommodation as long-term accommodation.

In determining whether premises are 'predominantly for long-term accommodation' an entity includes all individuals that are provided with commercial accommodation in those premises. Therefore, although the students are provided with GST-free student accommodation, if the supply satisfies the definition of 'commercial accommodation' the students are included in determining whether the premises are 'predominantly for long-term accommodation'.

'Commercial accommodation' is defined in section 87-15 of the GST Act to mean the right to occupy the whole or any part of commercial residential premises. Premises used to provide accommodation in connection with a school are commercial residential premises (paragraph (b) in the definition of commercial residential premises in section 195-1 of the GST Act). The entity, a school, is providing accommodation to its students in a «boarding» house. This accommodation is in connection with the school and as such, the entity's «boarding» house is commercial residential premises.

As the entity is providing accommodation to the students in commercial residential premises, the entity's supply of accommodation to the students satisfies the definition of commercial accommodation.

Therefore, the entity does include the number of students receiving GST-free student accommodation in calculating whether the premises used for staff accommodation are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the GST Act.

Note 1: If at least 70 per cent of the individuals (staff and students) provided with commercial accommodation in the «boarding» house are staying long-term, that is, 28 days or more (subsection 87-20(1) of the GST Act), the premises are 'predominantly for long-term accommodation' (subsection 87-20(3) of the GST Act). Where there are 2 or more individuals sharing a room who are charged separately, they are counted separately in calculating the 70 per cent figure (paragraph 154 of Goods and Services Tax Ruling GSTR 2000/20).

Note 2: Where an entity provides long-term commercial accommodation in commercial residential premises that are predominantly for long term accommodation, the GST payable on the supply of that accommodation is calculated at a reduced rate in accordance with section 87-5 of the GST Act. Alternatively, section 87-25 of the GST Act provides that the supplier can choose not to apply Division 87 of the GST Act and, as a result, treat its supplies of long-term commercial accommodation as input taxed under paragraph 40-35(1)(b) of the GST Act.

Note 3: A supply of accommodation to students in a «boarding house can meet the requirements of both GST-free student accommodation and taxable commercial accommodation. Section 9-5 of the GST Act provides that a supply is not a taxable supply to the extent that it is GST-free or input taxed. Therefore, the student accommodation would be treated as a GST-free supply.

Date of decision: 30 May 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 38-105
   paragraph 40-35(1)(b)
   Division 87
   section 87-5
   section 87-15
   subsection 87-20(1)
   subsection 87-20(3)
   section 87-25
   section 195-1

Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2000/20

Keywords
Goods and services tax
GST education
Student accommodation
GST long term accommodation
GST commercial residential premises
GST property & construction
Student accommodation - non-tertiary

Date of publication: 31 October 2003

ISSN: 1445-2782