ARTICLE · 13 JULY 2010

Retirement Village Sector GST Slug

Norton Rose Fulbright Australia

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On 9 June 2010, the ATO released a draft public ruling on the GST treatment of "ingoing contributions" in the development and sale of retirement villages. If the ATO’s preliminary views are adopted in the final ruling, they will impose significant costs on the retirement village sector.

AustraliaTax

David Stavropoulos

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Introduction

On 9 June 2010, the ATO released a draft public ruling on the GST treatment of "ingoing contributions" in the development and sale of retirement villages. If the ATO's preliminary views are adopted in the final ruling, they will impose significant costs on the retirement village sector.

A typical retirement village arrangement will initially involve a retirement village owner constructing a retirement village and entering into contracts with incoming residents. An ingoing contribution is a payment made by a proposed resident to a retirement village owner where that resident does not obtain title to its unit. The ingoing contribution secures a right (in the form of a lease or licence) to reside in the retirement village. Under the contract, the retirement village owner generally has an obligation (as required by State and Territory retirement village legislation) to repay the resident the amount of ingoing contribution when the occupancy right

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