Edited version of private advice

Authorisation Number: 1052186532112

Date of advice: 31 October 2023

Ruling

Subject: GST - taxable supply

Question

Can the sale of a manufactured/relocatable home, located in a Home Park, be treated as an input taxed supply of residential premises, when sold to an incoming resident?

Answer

No. The sale of a manufactured/relocatable home, to an incoming resident, cannot be treated as an input taxed supply as the supply will be a taxable supply in accordance with section 9-5.

This ruling applies for the following periods:

Financial year ending 30 June 2024 to

Financial year ending 30 June 2029

The scheme commences on:

The date this private ruling is issued

Relevant facts and circumstances

A Company runs a traditional caravan park.

The Company has an Australian business number (ABN) and is registered for goods and services tax (GST)

The Company has a residential section of land, where it intends to construct and sell manufactured/relocatable homes (home) for permanent living.

The Home Park, falls under the relevant state legislation for manufactured Homes.

The homes are newly constructed and are affixed to the ground, on site.

The purchaser of the home will not own the land on which the home is situated.

The homes are self-contained.

The purchaser has access to the Home Park facilities.

The purchaser of a home pays for their own utility costs as well as an ongoing site fee.

Assumption

It is assumed that the Company and the purchaser of a manufactured/relocatable home will enter into agreements in accordance with the relevant state legislation for Manufactured Homes (Residential Parks) in relation to both the purchase of the manufactured/relocatable home and the weekly site fees.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-65(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-65(2)

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

Section 9-5 provides that an entity makes a taxable supply if all of the following requirements are satisfied:

a)    the supply is made for consideration,

b)    the supply is made in the course or furtherance of an enterprise being carried on,

c)    the supply is connected with the indirect tax zone, and

d)    the entity is registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

In this case, the sale of a home, by the Company, located in a Home Park will satisfy all of the requirements of section 9-5. Accordingly, the sale of these homes will be a taxable supply unless the supply is GST-free or input taxed.

Division 38 provides that certain supplies can be GST-free, however, based on the facts of this case, we don't believe that Division 38 has any application in this case.

Section 40-65 provides that in relation to the sale of residential premises:

1)    A sale of real property is input taxed, but only to the extent that the property is residential premises to be used predominately for residential accommodation (regardless of the term of occupation).

2)    However, the sale is not input taxed to the extent that the residential premises are:

a)    Commercial residential premises, or

b)    New residential premises other than those used for residential accommodation (regardless of the term of occupation) before 2 December 1998.

The term 'real property' is defined in section 195-1 to include:

a)    any interest in or right over land; or

b)    a personal right to call for or be granted any interest in or right over the land; or

c)    a licence to occupy land or any other contractual right exercisable over or in relation to land.

The term 'residential premises' is defined in section 195-1 to mean land or a building that:

a)    is occupied as a residence or for residential accommodation; or

b)    is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation;

c)    regardless of the term of the occupation or intended occupation) and includes a floating home.

The term 'commercial residential premises' is defined in section 195-1 to include:

a)    a hotel, motel, inn, hostel or boarding house;

b)    premises used to provide accommodation in connection with a school;

c)    a ship that is mainly let out in the ordinary course of a business of letting ships out on hire;

d)    a ship that is mainly used for entertainment or transport in the ordinary course of a business of providing ships for entertainment or transport;

da) a marina at which one or more of the berths are occupied, or are to be occupied, by ships used as residences;

e)    a caravan park or a camping ground; or

f)     anything similar to residential premises described in paragraphs (a) to (e).

In this case, the Company will be selling a home, that will already be in place and located in the Home Park owned by the Company. The purchaser will own the home but will not own the plot of land that the home is situated on. The purchaser is required to pay for their utilities and a weekly site fee, separate to the purchase price of the home. Therefore, the definition of real property is not met in relation to the sale of these homes.

Paragraph 110A of Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6) states:

'Home parks in which sites for movable homes are rented and the homes themselves either rented or occupied by their owners are commercial residential premises under paragraph (f) of the definition, as they are similar to caravan parks.

It is intended that this home will be the occupants/purchasers main place of residence and that the sale will be in accordance with the relevant state legislation for Manufactured Homes (Residential Parks).

We consider the supply to a purchaser of the manufactured home within the Home Park is not a supply of the right to occupy the whole or any part of commercial residential premises. Therefore, the supply does not satisfy the definition of commercial accommodation.

Conclusion

As stated above, a sale of real property is an interest or right over land. In this case, the purchaser is not buying the land on which the home will be situated. The purchaser is only purchasing the manufactured home and will enter into a separate agreement to pay a site fee for the land.

The Company cannot treat the sale of the manufactured/relocatable homes as an input taxed supply because the sale does not meet the requirements under subsection 40-65(1). The sale of the manufactured/relocatable homes to an incoming resident will be a taxable supply in accordance with section 9-5.

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