Is GST payable on the portion of the letting and service fees you retain form your supplies of commercial residential premises?
No. The proceeds from supplying the rooms to guests are already subject to GST. The X percent you retain is the residue of the proceeds from your commercial residential supplies. You remit GST on 100 percent of the proceeds before you pay Y% of the remaining tariff to the owner of the room. As you have already remitted GST on your supplies of commercial residential premises and the related taxable services, such as movie rentals, the X percent residual that you retain is not consideration for any further supply. The treatment of the X percent is a rent payment for an input taxed supply of residential premises because the individual strata titled units can only have the characteristics of residential premises based on the facts of your case. As the supply of each individual lot to you is not a taxable supply, you are not making a creditable acquisition in relation to the X percent rent payments. This ruling applies for the following periods : From the tax period commencing DD October 20YY to the tax period ending DD September 20YY. The scheme commenced on: Before 20YY
• You are registered for GST and have been since x date. • You supply short term accommodation as a supply of commercial residential premises in the course of your enterprise. • GST is paid based upon x/xx th of the tariff charged to each guest staying at the apartments. • You sell drinks and breakfast packs from the foyer and reception during office hours and provide services such movie rental. • You have been operating under the arrangement set out below since 20XX and you are currently reporting the GST on the rent. • The overview of your business operation is as follows: o You lease independent strata titled units from the owners and pool them to supply short term accommodation. o The rent under the lease is xx percent of the proceeds from your supplies. o The remaining xx percent you currently remit GST on.
o Broadly, the lease states you receive xx% of each tariff you collect and remit xx% back to the lessors. The lease agreements with the owners are the key to the arrangement as it delineates your expense responsibilities from those of the owner. For example, costs of cleaning and any costs associated with the room are your responsibility and this is deducted from the xx% portion of the tariff you collect. Only one cost comes out of the 100% of the tariff before the xx split: commissions to various agents such as YY. Example: you collect a $xx tariff for a room. The agents such as XX get xx% which means $xx is deducted. The remainder is $xx which is then subject to the split. Out of that xx% you bear the costs related to holding out the room for short stays. o You pay xx percent of your proceeds to the lessors and you remit GST on the xx percent that you keep, but you do not think GST is payable on the xx percent portion.
A New Tax System (Goods and Services Tax) Act 1999 section 9-5