Yesterday the Commissioner published GSTR 2018/1 ‘Goods and Services tax: supplies of real property connected with the indirect tax zone (Australia)‘. The ruling outlines the Commissioner’s views on when a supply of real property is connected with the indirect tax zone under s 9-25(4) of the GST Act. The ruling replaces the Commissioner’s views set out in GSTR 2000/31 ‘Goods and Services tax: supplies connected with Australia” and GSTD 2004/3 ‘Goods and services tax: is a supply of rights to accommodation a supply of real property for the purposes of the A New Tax System (Goods and Services Tax) Act 1999. 

Section 9-25(4) as follows:

A supply of *real property is connected with the indirect tax zone if the real property, or the land to which the real property relates, is in the indirect tax zone.

The ruling states that the reference in s 9-25(4) to “land which the real property relates” means that an interest in, or a right over land, is connected with Australia if the physical land to which the interest or right over it relates, is in Australia. The test is the location of the land and not the location of the right.

The ruling also states that the supply of rights to accommodation will be a supply of real property connected with Australia when the accommodation is in Australia. This is irrespective of whether the supply of rights to accommodation provides any actual accommodation to the guest. For example, the supplier could be a tour operator which grants a traveler the right to stay at a hotel in Australia, where the hotel is operated by a different entity. The tour operator is making a supply of rights to accommodation in Australia which is a supply of real property connected with Australia.

The ruling applies from 22 August 2018.