ARTICLE · 20 MARCH 2012

GST on exit fees payable to leasehold retirement village operators

Gadens Lawyers

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The ATO released a draft GST ruling on the GST treatment of exit fees payable to leasehold retirement village operators.

AustraliaTax

Arthur Koumoukelis

The ATO recently released for public consultation draft GST ruling GSTR 2012/D2 on the GST treatment of exit fees payable to leasehold retirement village operators and in doing so, seeks to embellish what is 'an input taxed supply' in a village. The draft ruling affirms and expands on the ATO views expressed in Interpretative Decision ATO ID 2001/634. It also supplements the ATO's ruling on interest-free loan arrangements for leasehold villages.

The ATO's preliminary views expressed in the draft ruling could act as a disincentive to developers of leasehold villages seeking to recoup GST on their development costs. However, long-term operators may welcome some aspects of the draft ruling.

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