Hi all
I work for a small to medium consultancy business and we were previously accommodating our transient staff (when the come back to head office for 1 to 7 days) in a furnished apartment business locally (Quest apartments). It has been costing us a fortune (could have been over a year about $70000) so I suggested to the managing director that I was thinking of buying a new town house in the area and I was willing to furnish it and service it if he was interested. He agreed and my conveyancy lawyer did up a contract and he pays $380/week and the employees come and go and I service the apartment in the evenings or my partner and another friend do it when I cant (during work days). I have tried to keep it at arms length as possible.
My boss asked me about the GST and I asked my accountant and he told me residential accommodation is GST free. Our book keeper has had an issue with this after the fact of the lease being signed and she seems to think that there are some fringe benefit tax issues with it for both the employees staying there and potentially me. I don't understand this because they otherwise would be staying at the Quest or hotel and why would it affect me? I am an emplyee bu they could be renting the property of any landlord and the lease agreement is in both my partner and my name.
We also have two other house rented for staff in other towns and this has never come up. I think the book keeper has a bee in her bonnet because she didnt come up with the idea or offer.
Can any one help me with the implications of this.
Kind regards.
There are two issues here – Fringe Benefits Tax (FBT) and GST.
If an employer provides accommodation to an employee, a fringe benefit has been provided, which would generally attract FBT. However, if the accommodation is provided due to the fact that the employee is living away from home or the accommodation is situated in a remote area, FBT concessions/exemptions may apply. It seems to me that your bookkeeper was quite switched on to suggest this.
For GST, it will depend on the nature of the accommodation. If the accommodation is "commercial residential premises", such as serviced apartments, hotels, motels, etc, there will be GST on the "rent". As an employer paying the "rent", you can claim back the GST. On the other hand, if the accommodation is residential premises but not "commercial residential premises" (ie, generally no ancillary services and manager provided on site like a hotel, motel, etc), the supply of the accommodation is "input taxed" (not quite "GST-free" – there is a difference). As an input taxed supply, the "rent" on such accommodation will not be subject to GST and you can't claim back any GST.
Your accountant should be able to provide you with more definitive advice based on the facts.
Eddie
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