On 22 August 2018, the ATO issued GST Ruling GSTR 2018/1 (Ruling) which sets out the ATO’s view on when supplies of real property are connected with the indirect tax zone (Australia) under subsection 9-25(4) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). This Ruling replaces GSTD 2004/3 (GST: is a supply of rights to accommodation a supply of real property for the purposes of the GST Act?).
The Ruling states that a supply of real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia. The relevant test is the location of the physical land, not the location of any interest or right over the land. Further, the Ruling states that the supply of a right to accommodation in Australia constitutes the supply of real property connected with Australia. This means that it is irrelevant whether a supplier provides actual accommodation to the recipient, so long as the right to accommodation is provided.
For the supplier to be liable for GST on a supply of real property, one of the requirements is that the supply must be connected with Australia.
The Ruling provides the following examples of supplies of real property that are connected with Australia:
- selling land situated in Australia
- granting, assigning or surrendering a lease or licence of land situated in Australia
- a personal right to call for or be granted any interest or right over land in Australia
- granting a put or call option over land situated in Australia
- a licence to occupy land in Australia or
- granting contractual rights to occupy or stay at accommodation in Australia.
The final example includes a stay in a hotel or similar style of accommodation on presentation of a voucher or travel document. For example, a tour operator, whether a resident or non-resident, granting a traveller the right to stay in a hotel located in Australia makes a supply of real property connected with Australia even if the hotel is operated by a different entity.