Issue 1.54 raised by TIA 9 March 2009
9 March 2009 - Issue raised by TIA
Could the ATO please advise the current status of their deliberations in relation to the issue regarding the consideration for the sale of a retirement village and resident loans?
Also, can the ATO please confirm what directives have been issued to its audit teams in relation to current audits of retirement village owners where this is a 'live issue'?
Meeting discussion
Tony Long spoke to this item. He referred to the principles in the assumption of liabilities ruling in relation to these transactions. It was felt that this Ruling will need to be made clear as regards to the retirement village area.
Tony confirmed that there had been discussions with an industry body, and the Tax Office had obtained advice from counsel and from the Australian Valuation Office (AVO). He added that the issue is expected to be discussed by the Public Rulings Panel in May 2009, but there are different views on whether there has been an assumption of debts and a range of factual circumstances.
Tony advised that other issues were being considered, such as the treatment of deferred management fees. He also mentioned the issue of entitlement to input tax credits when a village is developed, with apportionment questions where there are input taxed supplies of residential premises and sales which may be GST free. The Tax Office has asked industry associations to give some common examples and we will then give our opinion to try to sort out the apportionment issue.
Tony advised the Tax Office will not be finalising audits pending resolution of the issue concerning the consideration for the sale of a village through the Rulings Panel process unless the taxpayer wants the audit finalised.
CPAA queried what ruling product was proposed in relation to GSTR 2004/9, and Tony advised that the application of that ruling to other circumstances was being considered, and no particular product was proposed at this stage. ICAA suggested that GSTR 2004/9 was unclear and Tony welcomed feedback before the May meeting
PCA queried whether the treatment of deferred management fees was likely to change, what guidance was to be provided, and whether any changes would be retrospective. Tony noted that it was desirable not to change the treatment of past transactions.
Action item
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2009.03.10
Members may make submissions on the operation of GSTR 2004/9 prior to the Rulings Panel consideration of the issue.
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Sections within Agenda items
Last Modified: Friday, 21 May 2010