The Inland Revenue’s Tax Counsel Office (TCO) has released Technical Decision Summary TDS 25/22: “GST – Supply of Accommodation”, which provides valuable guidance on how GST applies to providers of short and medium-term accommodation.
Key Facts
The case involved a GST-registered business constructing a new building offering over 100 self-contained, fully furnished rooms. The premises also featured shared kitchens, lounges, meeting spaces, and a 24-hour staffed reception. Residents paid an all-inclusive fee covering rent and utilities, with stays typically ranging from short to medium term.
The Issue
The main question was whether the property qualified as a “commercial dwelling” under section 2 of the Goods and Services Tax Act 1985. If so, supplies of accommodation would not be exempt under section 14(1)(c), meaning GST would apply — and the provider could claim input tax deductions for construction and operating expenses.
The Decision
The TCO confirmed the building met the definition of a commercial dwelling. Consequently, the supply of accommodation was not an exempt supply, and the business was entitled to input tax deductions related to construction and ongoing operations.
What This Means for You
If your business provides accommodation — such as serviced apartments, boarding houses, or managed lodgings — understanding whether your property qualifies as a commercial dwelling is critical for correct GST treatment.
Need help determining your GST position?
Contact our team today for practical advice on GST compliance, input tax recovery, and structuring your accommodation operations effectively.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.