The report highlights a continued focus on ensuring taxpayers are correctly reporting GST and maintaining effective tax governance frameworks, while also introducing a structured three-tier model used by the ATO to identify behaviours and transactions that may present GST risk, namely real property transactions and accommodation arrangements.

Key findings from the Top 1,000 GST Assurance Program

The ATO reported that between 1 July 2019 and 30 June 2026 it completed 1,034 GST reviews covering 860 taxpayers. As of 30 June 2026, 46% of taxpayers within the Top 1,000 population had achieved a high assurance rating, 49% achieved medium assurance, and 5% remained at low assurance. The ATO noted an encouraging trend of taxpayers improving their assurance ratings over time, with governance remaining one of the most significant barriers to achieving high assurance.

The report also emphasises the importance of GST governance, data integrity, and transaction testing. The ATO observed that taxpayers with well-designed and documented GST control frameworks are significantly more likely to achieve higher assurance outcomes.

The ATO’s three-tier model

A notable feature of this year’s report is the alignment of GST assurance activities with the ATO’s Public and Multinational Business Three-Tier Model (3TM). The model is designed to identify the key behaviours, events, and focus areas that drive tax performance and compliance outcomes.

Tier 3 identifies the specific transaction type and industries that the ATO considers warrant closer attention. The ATO’s current GST focus areas include:

• treatment of significant or unusual transactions involving financial supplies (e.g. financial acquisition threshold)
• treatment applied by financial services, investment, and insurance industries (e.g. GST apportionment, reduced input tax credits, reverse charge)
• the GST classification of food and health products
• reporting of GST on low value imported goods and inbound intangible supplies by offshore entities
• treatment applied to real property transactions and accommodation.

Real estate emerges as key focus area

Of particular interest is the ATO’s identification of real property transactions and accommodation arrangements as a specific Tier 3 focus area, with 15% of issues that received a separate assurance rating for this risk area in the 2025–26 financial year obtaining a low or red flag assurance rating. These issues particularly relate to the application of the margin scheme, GST-free farmland provisions, claiming of input tax credits in relation to the supply of residential accommodation, and GST treatment of build-to-rent (BTR) developments.

While the report does not introduce new GST rules for real property, its inclusion in the ATO’s formal risk framework is a clear signal that property transactions remain a significant area of concern from a GST assurance perspective. The GST outcomes of property transactions can be a complex technical issue and involve significant value.

Property funds, developers, and real estate investment groups may face increased scrutiny of matters such as land acquisitions and disposals, leasing arrangements, development structures, going concern concessions, margin scheme eligibility, and input tax credit entitlements. Given the volume, value, and complexity of transactions undertaken across the sector, the ATO is likely to continue closely examining the GST treatment adopted by property funds for both day-to-day operations and significant transactions.

BTR draft guidance may assist property funds

Against this backdrop, the ATO’s ongoing work on GST guidance for modern BTR developments may provide welcome clarity for the property sector.

The ATO is currently developing an addendum to GSTR 2012/6 dealing with commercial residential premises. The draft update was issued following recognition that modern BTR developments often have characteristics that differ from traditional residential accommodation and can involve complex questions regarding whether premises should be characterised as residential premises or commercial residential premises for GST purposes.

For more information, see our previous alert on draft ruling GSTR 2012/6DC, available here.

For property funds investing in the growing BTR sector, the finalised ruling is expected to provide greater certainty when structuring developments and assessing GST outcomes.

How SW can help

The ATO’s latest GST assurance findings reinforce that strong GST governance and accurate transaction reporting remain critical to achieving a high assurance rating. The inclusion of real property transactions and accommodation arrangements as a specific GST focus area highlights the ATO’s continued scrutiny of the property sector, particularly property funds, developers, and real estate groups.

The ATO’s draft guidance on BTR accommodation is a welcome development, providing greater certainty in an area that has historically presented GST issues. Property funds should carefully assess and document the GST treatment of their property transactions, particularly significant acquisitions, disposals, and development arrangements, to ensure they are well positioned for future ATO reviews.

SW’s indirect tax specialists have extensive experience advising on the GST treatment of property transactions and accommodation arrangements. If you would like to review the GST treatment adopted for your property activities, please contact your SW advisor.

Contributor

Dylan Kelly | Senior Consultant, Tax

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Background

The University of Melbourne (the University) entered into a number of agreements including the Project Deed, an agreement for lease, and an operator’s side deed between the University, CLV (Melbourne) Pty Ltd (CLVM) and Campus Living Villages Pty Ltd (Campus Living) for the purpose of providing student accommodation. The Project Deed included the University’s objectives which included:

• To obtain good quality, well located, secure and competitively priced facilities that meet students’ reasonable expectations
• To facilitate a good quality contemporary student residential living and learning community which contributes materially to a developing University community spirit, with an appropriate level of Residents’ support services and integrating with services to and opportunities for University students by and at the University
• For the continuing ability of the University to ensure appropriate standards and requirements are met, for example, with respect to amenities, Residents’ support services, security and renal levels but with no day-to-day management obligations.

There were requirements included in the Project Deed:

• Specific support services had to be provided to residents
• The accommodation was to be provided to students in preference to the general public
• The fees were inclusive of most of the costs of the ‘Residential Life Program’ provided by CLVM to encourage residents to participate in life at the Student Village
• There was an affordability criterion of 90% below market rental underpinning the rent charged by CVLM to residents of the Student Village
• The University was entitled to survey students regarding the accommodation.

The Law

Section 74 of the Land Tax Act 2005 provides a land tax exemption for land “if it is used by a charitable institution exclusively for charitable purposes”.

The applicability of this exemption turns on the proper interpretation of the words ‘used’ and ‘exclusively’. The Commissioner argued the land had to be used exclusively by the charitable institution. The taxpayer argued that the word exclusively was linked to the charitable purposes of the charitable institution. That is, it is the charitable purpose of the charitable entity that is relevant, not any business purpose of a third party leasing or occupying the land.

Key findings in judgement

The text of Section 74 alone points to a wider meaning of ‘use’ than the active physical use of the land by the lessee, as was held in Ryde Municipal Council v Macquarie University (the Ryde Case) and Chief Commissioner of State Revenue v Metricon (Qld) Pty Ltd.

The manner in which the provision is drafted points to an interpretation of ‘exclusively’ which is linked to the purposes of the charitable institution. The history of the provision and its predecessors indicated that the University used the land exclusively for its charitable purposes, even though it was leased to a commercial operator. The University furthered its objects through the arrangement as it actively promoted the provision of a quality contemporary student residential living and learning community. Whilst the University’s provision of student accommodation was indirect, it was held that the provision of the service in this way does not disentitle the University from relying upon the exemption.

This can be contrasted with an exemption where the land must be ‘used exclusively by a charitable institution for charitable purposes’ (such as an earlier exemption under the Land Tax Act 1958). This precluded any third party use.

It was held that university has ensured that in entering these agreements, it has been able to play an ongoing role in monitoring the provision by CLVM and Campus Living of the student accommodation and ancillary services. This was done to ensure that the University’s objectives with respect to the enhancement of the students’ overall educational objectives are maintained. This agreement is different to a situation where the land is leased to a lessee as office space who then uses the space for a business completely unrelated to the purposes of the charitable institution.

Therefore, the University is eligible to apply the land tax exemption.

In relation to a separate area sub-leased as a café, the Court concluded this was nevertheless exempt as the provision of the café and the attendant services provided by its operator were established in order to enhance the student living experience and to provide a further meeting place for residents to complement the other common areas in the Student Village. It was therefore ancillary to the charitable purposes of the University.

Importance of decision

This is an important decision for Universities that have leased land situated on campus to student accommodation providers. The findings in this case have hinged upon the particular facts of the arrangement and the University has been able to demonstrate that the land has continued to be used to achieve the universities charitable purposes not withstanding that it has been leased to a third party student accommodation provider that is endeavouring to derive a profit from the arrangement.

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