• Retirement villages

    The term ‘retirement village’ may be used to describe accommodation:

    • operated by charitable bodies, government, or commercial businesses
    • consisting of different types of premises, such as independent living units, serviced apartments, care facilities, or a combination of these
    • offering different occupancy arrangements
    • providing a wide range of facilities and services to residents.

    However, the term ‘retirement village’ has a particular meaning under GST law. We refer to villages that are eligible for specific GST concessions as ‘GST retirement villages’.

    A 'GST retirement village' is residential premises in which:

    • the accommodation is intended for people aged 55 years or older
    • there are communal facilities for the residents to use.

    The term 'GST retirement village' does not include:

    • premises used, or intended to be used, to provide residential care (within the meaning of the Aged Care Act 1997) by an approved provider
    • commercial residential premises.

    How GST applies

    How GST is applied depends on the type of living arrangement offered. Types of living arrangements in ‘GST retirement villages’ can include:

    See also:

    • GSTR 2007/1 Goods and services tax: when retirement village premises include communal facilities for use by residents of the premises

    Independent living units

    An independent living unit in a retirement village is generally:

    • described as a unit or villa
    • designed for retirees who are able to live independently within a retirement village.

    The unit can have one or more bedrooms and can be:

    • a high- or medium-rise complex
    • a terrace
    • semi-detached
    • stand-alone.

    Leasing an independent living unit

    If you lease an independent living unit (including the use of common areas, such as paths, driveways, gardens and communal recreation facilities) to a resident of a retirement village it is generally seen as an input-taxed supply of residential premises. This means that you will not be liable for GST on the lease of the unit and you cannot claim GST credits for purchases that relate to the lease.

    If you charge the resident an ongoing maintenance fee as part of the lease, this fee is generally treated as 'consideration (payment) for an input-taxed supply', as it is a payment in connection with the supply of the residential premises. However, where the fee covers the maintenance and upkeep of the whole village (for example, including the commercial kitchen, hairdressing salon and medical suite) then a portion of the fee may be treated as consideration for a taxable or GST-free supply.

    Selling an independent living unit

    If you sell an independent living unit for the first time since it was constructed, and it has not been used solely and continuously for leasing for at least five years – for example, an operator sells a newly constructed unit to a resident – you are selling 'new residential premises', which is a taxable sale. You are liable for GST, and can claim GST credits on the sale.

    Later sales of the unit (usually made by an existing resident to an incoming resident) are input taxed, so will not include GST.

    See also:

    Serviced apartments

    A serviced apartment in a GST retirement village is different from a serviced apartment providing short-term rental accommodation.

    An apartment is classed as a serviced apartment in a retirement village if all of the following apply:

    • the apartment is designed to be occupied by aged residents who need either assistance in daily living activities or nursing services (irrespective of the needs of individual residents)
    • at least one responsible person in reasonable proximity to the apartment is continuously on call to provide emergency assistance, such as first aid or arranging other mobility, nursing or medical assistance, to the residents of the apartments
    • the apartment is part of a single complex of apartments and is accessible from a common corridor linking the apartment to the other apartments in the complex
    • there is a communal dining facility in the retirement village for the residents to use.

    A serviced apartment is not a:

    • detached house
    • row house
    • terrace house
    • town house
    • villa unit
    • independent living unit.

    Requirements to be GST-free

    Supplying a serviced apartment in a retirement village by lease, hire, licence or freehold may be GST-free if you supply it:

    • to a resident who needs help with daily living activities or nursing services
    • with the necessary care services and other services, such as meals, laundry and cleaning, that meet the GST-free requirements.

    Care services are GST-free is they are:

    • provided to an aged or disabled person in a residential setting
    • of a kind covered by Schedule 1 to the Quality of Care PrinciplesExternal Link (made under section 96-1 of the Aged Care Act 1997)
    • include daily living activities assistance or nursing services that are only provided to people who require them.

    Charitable retirement villages

    If an endorsed charity operates a village that supplies accommodation and related services or meals to residents of the village, the supply is GST-free.

    The charity is entitled to claim GST credits for any creditable purchases it makes that relate to these supplies.

      Last modified: 30 Jun 2017QC 21960