Treatment on GST
Scenario:
I own a commercial property which has a gatekeeper's cottage at the back of it. This cottage is occupied at the moment (renting). The main building is still to be rented. My concern is, does the cottage rent incur GST as it is part of the commercial property, or it should be considered as residential?
Explanation:
The cottage is residential premises as defined in s 195-1 of the GST Act. As such, the supply of accommodation would be input taxed under s 40-35. Input-taxed supplies do not attract GST. So, the rent on the property will not incur GST. The main building would not be classified as residential premises. So, when that property is leased, the rent from it will attract GST. Since you will be making a mixed supply (one that is partially taxable and partially not), you will need to apportion any purchases that you make in relation to the property as a whole between the cottage (no input tax credits-see s 11-15(2(a)) and the commercial building (where input tax credits are claimable).