Non-Profit News Service No. 0359 - GST determination released about accommodation bond retention amounts and accommodation charges
Non-Profit News Service No. 0359 - GST determination released about accommodation bond retention amounts and accommodation charges
On 14 December 2011, we published Goods and Services Tax Determination GSTD 2011/4 Goods and services tax: Are accommodation bond retention amounts or accommodation charges paid, by residents of an aged care facility covered by the Aged Care Act 1997, that is supplying GST-free services under subsection 38-25 (1) of the A New Tax System (Goods and Services Tax) Act 1999, consideration for a GST-free supply?
The determination states that the following payments made by the residents of nursing homes and aged care hostels, that qualify for funding under the Aged Care Act 1997, are consideration for the GST-free supplies of care services and accommodation made by the care provider:
- the accommodation bond retention amounts and accommodation charges
- periodic accommodation bond payments - these payments are calculated with reference to the interest forgone on the bond and the retention amounts that would have applied if the accommodation bond has been paid as a lump sum.
See the following example from the determination.
Example: Accommodation bond paid as a combination of a lump sum and periodic payments
Stan is required to pay an accommodation bond to enter a Commonwealth Government funded aged care facility. The amount of the assessed accommodation bond that Stan is required to pay is $100,000. Stan agrees to pay the amount of the assessed accommodation bond as a combination of a $50,000 lump sum and periodic payments of $420 per month.
Because the $50,000 lump sum payment paid by Stan is large enough to cover the monthly amounts that the approved provider is entitled to retain, Stan only needs to pay a periodic payment equivalent to the amount that the approved provider could have earned if the remainder of the accommodation bond had been paid as a lump sum.
The periodic payments Stan makes to the approved provider are not refundable and are kept by the approved provider. The amounts of these periodic payments are consideration for the GST-free services and accommodation supplied to Stan by the approved provider.
After seven years, Stan leaves the facility and is entitled to the repayment of the bond less the retention amounts deducted and retained by the approved provider.1 The amounts retained by the approved provider from the $50,000 lump sum payment made by Stan are consideration for the GST-free supplies of residential care services and accommodation, under subsections 38-25(1) and (4), supplied to Stan by the approved provider.
|
For information about the Non-Profit News Service, including how to subscribe and links to previous articles, see About the Non-Profit News Service.
We encourage your feedback and suggestions for future topics to be covered by the news service. You can do this by:
|
1 The retention amount is an indexed amount that is capped under the Aged Care Act 1997, and that is deducted from an accommodation bond balance or included in an accommodation bond periodic payment. It accumulates for a maximum period of five years. From 1 July 2011, the maximum retention amount was $318.
Last Modified: Tuesday, 24 January 2012
|