Concessional GST on commercial accommodation
When you provide commercial accommodation for a stay of 28 days or more, a concession can lower the GST on those long-term guests. You can charge GST on only half the supply — while still claiming your input tax credits — or treat the supply as input-taxed. This factsheet explains how Division 87 works, which premises qualify, the long-term versus short-term rules, and includes an interactive concessional GST calculator.
English & Chinese PDF versions of this factsheet are available on request — please contact us.
* General information only. Kristy Pan & Co. provides this material for general knowledge; it does not constitute tax or financial advice and does not take account of your specific circumstances. This information is current as at 9 June 2026; we will do our best to update it when any policy or legislation changes. Please contact us before acting.
What the concession is
Most taxable supplies carry GST at 10%. But where an individual is provided commercial accommodation as long-term accommodation — a stay of 28 days or more — a concession under Division 87 lets the provider reduce the GST on that supply. The aim is to keep longer stays roughly in line with the GST treatment of ordinary residential rent.
For a qualifying long-term stay the provider can choose one of two methods:
GST on 50%
Charge GST on only half the value of the supply — an effective rate of about 5.5% of the tariff — and still claim input tax credits on the costs of providing it.
Input-taxed
Treat the supply as input-taxed — charge no GST at all — but you then cannot claim input tax credits on the costs of providing that accommodation.
Stick with it for 12 months
Once you choose a method it must be applied consistently for 12 months. This affects your sales only — there is no change to the GST you account for on your purchases.
Half-rate GST keeps your credits; input-taxing does not.
The 50% method usually suits a provider with meaningful running costs — cleaning, utilities, repairs, agent fees — because you keep the input tax credits on all of them. Input-taxing can suit very low-cost arrangements where there is little GST to claim back. The right choice depends on your cost base and the mix of long- and short-term guests, so it is worth modelling before you lock in a method for the year.
What qualifies
Commercial accommodation means the right to occupy commercial residential premises, together with anything supplied as part of the tariff — typically cleaning and maintenance, electricity, gas, heating and cooling, and the use of a telephone and television. The concession only applies where the premises themselves qualify.
Premises that can qualify
Hotels, motels & the like
Hotels, motels, inns, hostels and boarding houses, plus school and student accommodation.
Parks & grounds
Caravan parks and camping grounds, where sites and on-site accommodation are let to occupants.
Marinas & ships
Marinas with residential berths, and ships let out for hire as accommodation.
Aged-care & retirement
Aged-care and retirement-village-style residences that supply accommodation as part of their service.
Separate supplies still attract the full 10%.
The concession covers the accommodation itself and what is bundled into the tariff. Anything you bill on top of the tariff is a separate supply at the full 10% — mini-bar items, restaurant or room-service meals, separately-metered electricity, personal laundry, and individually charged phone calls. Keep these lines distinct on your invoices so the right rate applies to each.
Long-term vs short-term
The concession is only about length of stay. A short stay never qualifies. For long stays, how much of the stay gets the concession depends on whether the premises are predominantly for long-term guests.
Under 28 days — no concession
A stay of fewer than 28 days is always taxed at the full 10% GST. The concession simply does not apply to short-term guests.
Predominantly long-term — concession on the whole stay
Where premises are predominantly long-term — at least 70% of guests stay 28 days or more — the 50% concession (or input-taxing) applies to the whole of each long-term stay, including the first 27 days.
Not predominantly long-term — concession from day 28
Where fewer than 70% of guests are long-term, the concession applies only from the 28th day onwards. The first 27 days of the stay are taxed at the full 10%, and the concessional treatment begins from day 28.
Know your guest mix before you apply the concession.
Whether your premises are "predominantly" long-term turns on the proportion of long-term guests — and that can shift season to season. We help you measure it, decide which day the concession starts from for each stay, and keep records that support the position if the ATO asks. The calculator below shows the GST on a single stay; the 70% test decides whether the concession reaches the first 27 days.
Concessional GST calculator
See how the concessional GST compares with the full 10% on a long-term stay. Enter the nightly tariff (including GST) and the number of nights to see the GST under each method and the saving the 50% concession delivers.
Long-term accommodation GST explorer
This calculator is a simplified illustration only. The concession depends on the premises qualifying and on the predominantly-long-term (70%) test — which also determines whether the concession reaches the first 27 days. We confirm the right treatment for your premises.
How we help
We assess whether your premises qualify as commercial residential premises, work out whether you are predominantly long-term, and help you choose between the 50% concession and input-taxing. We then handle the bookkeeping and the GST labels on your BAS, separate out the supplies that stay at full rate, and keep the chosen method consistent across the 12 months — so your long-term stays are treated correctly and your input tax credits are protected.
Glossary of terms
- Commercial accommodation
- The right to occupy commercial residential premises, together with cleaning, electricity, gas, heating and cooling, telephone and television where they are supplied as part of the tariff.
- Commercial residential premises
- Premises such as hotels, motels, inns, hostels, boarding houses, caravan parks and camping grounds, marinas with residential berths, ships let for hire, school accommodation and similar establishments.
- Long-term accommodation
- Commercial accommodation provided to an individual for a continuous period of 28 days or more. Premises are "predominantly" long-term when at least 70% of guests stay that long.
- Input-taxed
- A supply on which no GST is charged and for which the supplier cannot claim input tax credits on the costs of making that supply.
- Input tax credit
- A credit a registered business can claim for the GST included in the price of things it buys for its business. It reduces the net GST paid to the ATO.
- Concessional GST
- The reduced GST that can apply to long-term commercial accommodation — GST charged on only 50% of the supply, while input tax credits are still available.
- Division 87
- The part of the GST law that provides the concession for long-term commercial accommodation, allowing the 50% reduction or input-taxed treatment.
- ATO
- The Australian Taxation Office — the federal agency that administers GST and other taxes.
This factsheet contains general information only about the GST concession for long-term commercial accommodation under Division 87 of the GST law. The calculator is a simplified illustration and not a substitute for a precise calculation. This material does not take into account your circumstances and is not advice. Please consult Kristy Pan & Co. about your situation before acting.