Tourism Planning Taskforce Report - Western Australian Planning ...

Chapter 7Term of Reference 4guests on goods and services provided. Whilethis issue is not directly within the terms ofreference of the taskforce, it has beenidentified as inequitable in favouring specificdevelopment types.Investors who purchase strata titled units in atourism development from developers will payGST on the purchase price and will not beeligible for a refund. This is because theAustralian Taxation Office views servicedapartments in a tourism complex as beingeasily switched between private and businessuse, even where part of a commercialcomplex, and so considers such units asresidential units.This differs from a tourism developmentundertaken without subdivision, as any GSTpaid on construction and sale of thedevelopment can be recouped by the investor.This issue could be resolved through theinclusion in the definition of commercialresidential premises an individual strata unit ofa tourism development that is subject tomandatory pooled management requirements,long term leases by investors to managementcompanies, and restrictions on residential use.These conditions reflect the recommendationsof the taskforce on the use of strata schemesfor tourism development. They are similar tothe requirements of the Foreign InvestmentReview Board for a strata titled hotel to bedesignated for foreign investment policypurposes.The taskforce concluded that achieving thismodification to the GST framework for stratatitled tourism development would supportinvestment in tourism projects. In addition, itwould encourage strata schemes of a formthat will result in sustainable tourism projects.7.5 Conclusions• The use of broad tourist zoningclassifications can have significant impactsin increasing the market values placed ontourist zoned land, and associated negativeimplications on the long-term viability oflow-cost forms of tourist accommodation.The use of more detailed zoningframeworks, designed to maintain a varietyof accommodation types, can haveancillary benefits in ameliorating theseimpacts through reducing the speculativeeffect on the valuation of such land.• The introduction of specific criteria and astrategic framework that clearly establishesthe permissibility or otherwise forincorporation of a residential component inthe development of tourist zoned land hasthe potential to reduce the land tax impactfrom increases in residential propertyvalues on strategic tourism sites.• Tourist accommodation developmentsunder strata schemes generally achievesignificant reductions in the aggregate landtax payable, relative to similardevelopments held by a single entity.Notwithstanding other applicable rates andlevies, this encourages the use of strataschemes contrary to the interests ofachieving integrated tourism managementof tourism developments.• The application of the land tax system totourist accommodation development doesnot take into account the wide communitybenefit of tourism investment, the need toretain strategic sites, including low-costtourist accommodation facilities, orinequities associated with the current taxingof developments subject to strata schemes.• The introduction of a tiered zoning structurefor identified strategic sites, such as theuse of a tourism deferred zone, is worthy ofinvestigation to provide for recognition ofthe future time frame for the developmentof some of these sites.• The introduction of the GST has createdinequities in the taxing of tourismdevelopments under strata schemes.Modification of the GST ruling for projectsunder mandatory common managementrequirements will acknowledge the bonafide nature of such projects and supportthis as the preferred model for tourismdevelopment strata schemes.Tourism Planning Taskforce Report61