The Full Federal Court handed down the decision of South Steyne Hotel Pty Ltd & Ors vs FC of T on 20 November 2009 confirming most of the previous judgement in relation to characterisation of supplies in relation to serviced apartments.  For property developers, this is an important case as it details the Courts view on different types of supply by way of lease and sale of premises and the GST consequences.  The decision generally coincides with the Commissioners views as expressed in GSTR 2000/20 regarding the sale and lease of commercial residential premises. 

Facts

  • The property was purchased by South Steyne in 2000;
  • Each apartment unit, car park, management lot, offices etc became separate strata titled lots on 10 August 2006;
  • On 29 September 2006, South Steyne:

    • transferred the management lot to Mirvac Hotels Pty Ltd (“MHL”); 
    • granted 83 separate leases to Mirvac Management Pty Ltd (“MML”) for apartments which obliged MML to carry on a serviced apartment  business;
    • MHL took exclusive control of the operation of the serviced apartment business pursuant to an agreement with MML which conferred upon MHL the benefit of MML’s rights under the leases

  •  Between 29 September 2006 and 31 October 2007, South Steyne sold 3 apartments to MBI Properties Pty Ltd (“Properties”) where each apartment sold was subject to the applicable lease that had been granted to MML and which allowed Properties to participate in a management scheme that mirrored the scheme under the MML leases; 
  • On 17-18 October 2007, an individual stayed in an apartment and used various services available to guests of the serviced apartment. 

Issue and decision

There are four categories of supply that were considered:





Please note that Treasury has undertaken a review of the margin scheme generally and in particular the margin scheme valuation provisions.  We are awaiting Treasury’s response to the numerous submissions made to them.

Authors: Stephen O’Flynn and Lin Ma, Moore Stephens Melbourne

Should you have any queries in relation to the South Steyne case, please contact your Moore Stephens relationship partner.