TR 2002/14A2 - Addendum
Income tax: taxation of retirement village operators
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This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953. It amends Taxation Ruling TR 2002/14, which was released on 28 June 2002, which discusses several issues as to the application of the tax laws to certain classes of persons, such as operators and residents, in respect of various operations and activities in the retirement village industry.
In Retirement Village Operator v. Commissioner of Taxation  AATA 887 and The Retirement Village Company v. Commissioner of Taxation  AATA 298, the Administrative Appeals Tribunal found that certain payments made by a retirement village operator to outgoing residents (or to their legal personal representatives) are deductible to the retirement village operator under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). These payments represent a share of any increase in the entry price payable by a new resident (that is, the difference between the initial entry price paid by the outgoing resident and the entry price payable by the new resident).
TR 2002/14 is amended as follows:
Omit paragraph; substitute:
50. Where a village operator, in addition to repaying the deposit or loan received by a village operator upon the grant of a lease, makes a payment to an outgoing resident (or to their legal personal representatives) that represents a share of any increase in the entry price payable by a new resident (that is, the difference between the entry price paid by the outgoing resident and the entry price payable by the new resident), such payments are deductible under section 8-1.
Commissioner of Taxation
26 November 2014
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