ATO Interpretative Decision

ATO ID 2006/111 (Withdrawn)

Goods and Services Tax

• ATO ID 2006/111 has been withdrawn. The issues discussed in ATO ID 2006/111 are now covered in Goods and Services Tax Ruling GSTR 2012/3 - Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels. GSTR 2012/3 was released on 11 July 2012.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Are pathways and roads in a retirement village 'corridors' for the purposes of paragraph (c) of the definition of 'serviced apartment' in section 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Decision

No. Pathways and roads in a retirement village are not 'corridors' for the purposes of paragraph (c) of the definition of 'serviced apartment' in section 195-1 of the GST Act.

Facts

The entity operates a retirement village.

The retirement village consists of a number of apartments in small groups with each small group under a single roof. Each apartment is accessible from an external door, and has pathways and/or roads around it. The apartments are not accessible to each other from within the building.

Reasons for Decision

Paragraph 38-25(3A)(a) of the GST Act provides that services provided to a resident of a retirement village are taken, for the purposes of paragraph 38-25(3)(a) of the GST Act, to be provided in a residential setting if, and only if he or she is a resident of a serviced apartment in the retirement village.

The term 'serviced apartment' in paragraph 38-25(3A)(a) of the GST Act is defined in section 195-1 of the GST Act. Paragraph (c) of that definition states:

the apartment is part of a single complex of apartments to which paragraphs (a) and (b) apply, and is accessible from a common corridor linking the apartment to the other apartments in the complex

There are several dictionary definitions describing the meaning of a 'corridor'. Of these definitions the Shorter Oxford Dictionary, 2002, 5th edn, Oxford University Press (Oxford Dictionary) defines a 'corridor' as:

1.

A passage or covered way between two places

2.

An outdoor covered way round the inside of a quadrangle or the court of a building

3.

A long passage in a building esp. one with many doors to side rooms.

However, the explanatory memorandum to the Tax Laws Amendment (Retirement Villages) Bill 2004 (EM) confirms the intention for 'corridor' to refer to passages within a building, stating at paragraph 1.31:

Serviced apartment accommodation is generally higher density accommodation than independent living units. Accordingly, serviced apartments must be part of a single complex of apartments that all meet the necessary conditions to qualify as serviced apartments. The serviced apartments need to be accessible from a common corridor (with or without linking lifts) connecting the apartment to the other apartments in that building. [emphasis added]

Therefore, having regard to the EM a corridor for the purposes of satisfying the definition of a 'serviced apartment' is a passage in a single building that connects an apartment to other apartments in that building. It would not include passages to connect an apartment to another apartment that is outside the building but part of the retirement village.

As such, the pathways and roads in a retirement village are not corridors for the purposes of paragraph (c) of the definition of 'serviced apartment'.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   paragraph 38-25(3)(a)
   paragraph 38-25(3A)(a)
   section 195-1

Other References:
Shorter Oxford Dictionary, 2002, 5th edn, Oxford University Press

Keywords
Goods and services tax
GST health
Section 38-25 - residential care
Taxable supply

Business Line:  Indirect Tax

Date of publication:  28 April 2006

ISSN: 1445-2782