Refunds totalling $5,330.13 will be offered to 47 current and former residents of two boarding houses following Australian Competition and Consumer Commission intervention.
"The ACCC has approved an administrative settlement with the proprietor of Perouse Lodge and Avoca Lodge, in Sydney's eastern suburbs, after the concessional rate of Goods and Services Tax applicable to long term residents of commercial residential premises was incorrectly applied.
The resolution includes requiring the lodges' proprietor to:
- run a series of advertisements in The Sydney Morning Herald advising former residents of the availability of refunds
- make refunds to all persons who can be identified as having been affected by the conduct
- donate any unclaimed amount to the Matthew Talbot Hostel.
"It is crucial that both proprietors and residents of hotels, motels, inns, boarding houses, caravan parks, camping grounds and similar premises understand that providers of long term commercial residential accommodation [stays of 28 days or more], may choose between several different methods of dealing with the implementation of the New Tax System", ACCC Chairman, Professor Allan Fels, said today.
"Broadly, they may:
- input tax all long-term accommodation. This means that they will not include GST in their long-term accommodation prices. The provider will also not be able to claim input tax credits for the GST they have paid for goods and services they buy for use in providing that accommodation
- charge a concessional (reduced) amount of GST on long-term accommodation. Where they choose this option, they may pass the GST liability on to their residents, but it will be a reduced amount
- where the accommodation provided in the premises is predominantly long-term (that is, at least 70% of the guests stay for 28 days or more), the provider may charge the reduced amount of GST on the whole of the stay where the resident's stay will be 28 days or more. GST is calculated on a reduced value of 50% of the normal GST-inclusive price. For guests who stay less than 28 days the normal GST amount will apply
- where the accommodation provided is not predominantly long term, the normal GST rate applies for the first 27 days. If a guest stays for 28 days or more the GST is calculated on a reduced value of 50% of the normal GST-inclusive price from the 28th day.
"Failure to correctly apply the concessional rules may amount to a breach of the Trade Practices Act 1974. If proprietors are feel they may be in breach of the Act, they should contact the ACCC which will try to find a suitable resolution.
"Any resident of commercial residential premises who believes they may have been charged an excessive amount of GST should contact the ACCC and can be assured that all personal details will be maintained in the strictest confidence".
Note to Media: Media outlets should contact the ATO or visit the ATO Internet site if they have any queries about the concessional treatment of commercial residential premises. The rules are very specific and the media should be careful about the manner in which they are represented to the public.