Tax Office Warning On Accommodation Claims

The Australian Tax Office has warned charities to be wary of entering into arrangements designed to secure input tax credits by treating residential accommodation as GST-free.

Tax Commissioner Michael D’Ascenzo says the Tax Office is concerned some charities may be acting on bad advice and generating an artificial arrangement with other associated charities to gain a tax benefit.

The arrangements involve charities leasing land and buildings to other associated charities in order to exploit concessionary GST provisions. No actual payments are made on the lease, but the associated charity treats the supply of accommodation to residents as GST-free and claims input tax credits.

The ATO says Charities and their associates need to be careful when accepting advice on these types of arrangements. By entering into these arrangements people may be claiming tax credits they are not entitled to. The Tax Office says it’s concerned that anti-avoidance provisions and general provisions of the GST laws may apply to such arrangements and this is currently under review. It says if charities are unsure about their GST obligations they can request a private ruling from the Tax Office.

The ATOs detailed ‘Taxpayer Alert’ on this issue can be found here.