Find out what are the GST obligations for retirement villages.
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Meaning of retirement village
The term ‘retirement village’ may be used to describe accommodation:
- operated by charitable bodies, government, or commercial businesses
- consisting of different types of property, such as independent living units, serviced apartments, care facilities or a combination of these
- offering different occupancy arrangements (for example, lease-hold ownership, free-hold ownership)
- providing a range of facilities and services to residents.
When we discuss retirement villages and GST, we mean a retirement village that meets all the following:
- the property is residential property
- the accommodation is intended for people aged 55 years or older
- there are communal facilities for the residents to use.
Retirement villages don't include:
- property 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 property.
How GST applies
How GST is applied to supplies made by a retirement village operator depends on the type of living arrangement offered or who is operating it (for example, a charity or a commercial operator).
Independent living units
An independent living unit in a retirement village is generally:
- described as a unit, villa unit, town house or something similar
- designed for retirees who can live independently within a retirement village.
The unit can have one or more bedrooms and can be:
- in a multi-storey building or complex
- a terrace house
- semi-detached (for example, a duplex)
- stand-alone or fully detached.
Leasing out an independent living unit
If you lease out an independent living unit to a resident of a retirement village, GST isn't included in the price and you can't claim GST credits.
If you charge residents ongoing maintenance fees as part of the lease, generally GST isn't included in the price and you can't claim GST credits. However, if 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 the free-hold title of an independent living unit for the first time since it was constructed, and it's not been used solely and continuously for leasing for at least five years, you are selling a new residential property. This means you are liable for GST and can claim GST credits on acquisitions relating to the sale. For example, if you are an operator and you sell a newly constructed unit to a resident, GST is included in the price and you can claim GST credits.
If it's a later sale of the unit (usually made by an existing resident to an incoming resident), GST isn't included in the price and you can't claim GST credits.
For more information about retirement village premises, see GSTR 2007/1 Goods and services tax: when retirement village premises include communal facilities for use by residents of the premises.
A serviced apartment in a retirement village is different to a serviced apartment providing short-term rental accommodation. It isn't a detached house, row or terrace house, town house or villa unit.
If you sell an apartment classed as a serviced apartment in a retirement village, GST isn't included in the price and you can claim GST credits when all of the following apply:
- It's 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 to the residents, such as first aid or arranging other mobility, nursing or medical assistance.
- It's 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's a communal dining facility in the retirement village for the residents to use.
Requirements to be GST-free
If you supply a serviced apartment in a retirement village by lease, hire, licence or freehold, GST isn't included in the price and you can claim GST credits if:
- you supply it to a resident who needs help with daily living activities or nursing services
- it provides necessary care services and other services, such as meals, laundry and cleaning, that meet the GST-free requirements.
GST isn't included in the price, and you can claim GST credits for care services if they are:
- provided to an aged or disabled person in a residential setting
- covered by Schedule 1 to the Quality of Care PrinciplesExternal Link (made under section 96-1 of the Aged Care Act 1997)
- 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, services related to the supply of accommodation, 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 relating to these supplies.
Find out how GST applies to residential property, build-to-rent property developments, and retirement villages.