Build-to-rent developments: ATO draft updates to GSTR 2012/6
20/11/2025
On 5 November 2025, the ATO issued a new draft taxation ruling GSTR 2012/6DC (‘the ruling’) expanding on existing principles provided in GSTR 2012/6 – Goods and services tax: commercial residential premises.
The draft ruling provides further clarity on how existing principles apply to build-to-rent (‘BTR’) developments, determining the status of occupants, and the characteristics of hostels and boarding houses.
Supply of BTR leases & status of occupants
The draft ruling provides further clarity on determining if BTR developments are residential or commercial residential premises, namely if the accommodation supplied is similar to a hotel, motel, inn, hostel or boarding house for the purposes of s195-1 (a) of the GST Act.
Several findings of a new example (Example 12A) contained in the ruling outline key criteria to be considered in determining if a BTR development is residential accommodation:
- The apartments are self-contained with bedroom, bathroom, kitchen and living facilities.
- The building includes communal spaces and amenities available to all occupants, including dining area, gym, laundry facilities etc. No shared meals or communal kitchens are provided to occupants.
- Apartments are rented to occupants on a long-term basis. Occupants have the right to quiet enjoyment of the apartment with management having limited reasons and must give reasonable notice under the lease agreement to access occupants’ apartments.
Where the above characteristics are found in an accommodation, the accommodation will not be deemed to be commercial residential premises.
This is on the basis that the nature of the accommodation is permanent, the occupants obtain exclusive possession of their self-contained apartment in the same way as a tenant, and the accommodation does not provide additional services to the occupants that a hotel would, for example.
Paragraphs 188A – 188G of the ruling provide further detail on the rights and enjoyments of a tenant compared to a guest, namely the right of exclusive possession.
Hostels & boarding houses
While the draft ruling namely provides clarification relating to BTR developments and status of occupants, it also provides updates and further clarity on the characteristics of hostels and boarding houses.
In relation to hostels, the ruling provides that while a hostel may serve as an occupant’s principal place of residence for a period of time, the occupancy is generally non-permanent or transient in nature. The hostel is used for a limited time or limited purpose (e.g. student hostel provides temporary residence during period of education) and there is no right or expectation of permanent residence.
Furthermore, the ruling provides that hostels generally have shared facilities, however, the degree of shared facilities may vary. Some hostels may only provide shared kitchen and toilet facilities, while others may provide shared sleeping, toilet, and ablution facilities.
In relation to boarding houses, the ruling includes that even if premises may meet the definition of a boarding house under specific state or territory legislation, this alone does not determine whether the premises are, or are considered similar to, a boarding house.
As such, it is imperative that the premises is determined to meet the characteristics of a boarding house as per GSTR 2012/6, and the definition of a boarding house in state or territory legislation is not solely depended on.
How SW can help
While the ATO has provided further clarity on distinguishing accommodation as residential or commercial, the application of these principles is highly fact dependent. There is no ‘one size fits all’ approach, and each accommodation should be reviewed on a case-by-case basis.
SW’s indirect tax specialists have extensive experience in advising on accommodation. If you would like to explore how the draft ruling may affect your current or planned accommodation arrangements, or if you require tailored guidance on any aspect of the ruling, please reach out to your SW advisor. Our team is ready to help you navigate these changes with confidence.
