Issue
Can the entity, a university, apply the concessional treatment in section 87-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies commercial accommodation in a university residential college to a non-student, for a continuous period of 28 days or more?
Decision
Yes, the entity can apply the concessional treatment in section 87-5 of the GST Act when it supplies commercial accommodation in a university residential college to a non-student, for a continuous period of 28 days or more.
Facts
The entity is a university. The entity is not a charitable institution or a gift-deductible entity.
The entity supplies a non-student with commercial accommodation in its residential college for a continuous period of 28 days or more in the same premises.
At least 70% of the non-students are provided with commercial accommodation in the residential college for periods of 28 days or more.
To the extent that the university residential college is used to provide accommodation to non-students, it is 'commercial residential premises' as defined in section 195-1 of the GST Act commercial residential premises (see ATO ID 2002/969).
The entity is registered for goods and services tax (GST). The supply of commercial accommodation in the university residential college satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Section 87-5 of the GST Act provides a concessional treatment where: • there is taxable supply of commercial accommodation; • the accommodation is provided in commercial residential premises that are predominantly for long-term accommodation; and • the accommodation is provided to an individual as long-term accommodation.
A supply is a taxable supply where the elements of section 9-5 of the GST Act are met. The entity is registered for goods and services tax (GST). The supply of commercial accommodation in the university residential college satisfies the other positive limbs of section 9-5 of the GST Act. Therefore, the supply is a taxable supply.
The term 'commercial residential premises' is defined in section 195-1. To the extent that the university residential college is used to provide accommodation to non-students, it is 'commercial residential premises' as defined in section 195-1 of the GST Act (see ATO ID 2002/969). Therefore, the supply of accommodation is provided in commercial residential premises.
Under subsection 87-20(1) of the GST Act, long-term accommodation is provided to an individual if commercial accommodation is provided for a continuous period of 28 days or more, in the same premises.
The entity supplies the non-student with commercial accommodation in its residential college for a continuous period of 28 days or more in the same premises. This means that the entity provides long-term accommodation to that student.
Subsection 87-20(3) of the GST Act provides that commercial residential premises are predominantly for long-term accommodation if at least 70% of the individuals who are provided with commercial accommodation in the premises are provided with long-term accommodation.
As at least 70% of the non-students are provided with accommodation in the university residential college for periods of 28 days or more, the premises provided to non-students are predominantly for long-term accommodation.
The entity supplies the non-student with commercial accommodation in its residential college for a continuous period of 28 days or more. This means that the accommodation is provided to an individual as long-term accommodation.
Accordingly, all the elements of section 87-5 of the GST Act are satisfied. Therefore, the entity can apply the concessional treatment available under that section, when it supplies commercial accommodation in a university residential college to a non-student for a continuous period of 28 days or more. [Note: The entity may choose, under section 87-25 of the GST Act, not to apply Division 87 to any supplies of commercial accommodation it makes. This means that the supply is treated as an input taxed supply under paragraph 40-35(1)(b) of the GST Act.]