A current GST review being undertaken by the
Australian Tax Office (ATO) could result in a significant increase
in GST imposed on the retirement village
industry.
The ATO is currently reviewing its views on how to calculate GST
on the sale of the real property component of retirement villages
and, in particular, the sale of independent living units (ILUs).
The discussion below is general in nature, since the GST treatment
of fees and charges by owners/operators to residents of retirement
villages depends on the exact structure of the operations and is a
complex issue.
Under GST law, the lease or licence of ILUs to residents are
generally input taxed. This means there is ordinarily no GST
charged to residents, however, the owner or operator of the village
is not entitled to claim GST credits on its expenses. Accordingly,
when owners or operators of retirement villages are charged GST, it
is normally a real cost.
