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Edited version of private ruling
Authorisation Number: 1011729299100
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Ruling
Subject: GST and the supply of accommodation in a retirement village
Question
Are you entitled to the concessions contained in section 38-260 of the GST Act with regard to your supply of accommodation?
Answer
No, you are not entitled to the concessions contained in section 38-260 of the GST Act with regard to your supply of accommodation?
Relevant facts
You began construction of a retirement village in 2007.
You are registered for GST and you are neither an endorsed charitable institution nor an endorsed trustee of a charitable fund.
The village contains 11 independent living units, and another 2 are under construction.
The units are supplied to residents under a 49 year lease agreement.
Your retirement village units meet the definition of residential premise contained in the GST Act.
Relevant legislative provisions
38-25 of A New Tax System (Goods and Services Tax )Act 1999 (GST Act)
38-260 of A New Tax System (Goods and Services Tax )Act 1999 (GST Act)
38-250 of A New Tax System (Goods and Services Tax )Act 1999
Reasons for decision
You have advised that you supply accommodation in residential premises in your Retirement Village. Therefore, your supplies will be input taxed as per section 40-35 of A New Tax System (Goods and Services Tax ) Act 1999 (GST Act) unless they are GST-free supplies of accommodation under other sections of the GST Act.
There are three relevant sections of the GST Act that deal with accommodation for the aged. They are 38-25, 38-250 and 38-260. Goods and Services Tax Ruling GSTR 2007/1 Goods and services tax: when retirement village premises include communal facilities for use by the residents of the premises (GSTR 2007/1) provides some background on these provisions at paragraphs 12 and 13.
12. In December 2004, amendments were made to the GST Act by Tax Laws Amendment (Retirement Villages) Act 2004 (TLA(RV) Act). The amendments provided that residential care, services and accommodation supplied to the residents of serviced apartments in a retirement village may be GST-free under subsection 38-25(3).The amendments also provided that certain supplies made to residents of a 'retirement village', as defined, by a charitable institution or a trustee of a charitable fund that operates the retirement village are GST-free under section 38-260. Since the introduction of GST, and prior to the introduction of section 38-260, GST-free supplies have been able to be made by all charities, including charities that operate retirement villages, under section 38-250. This provision continues to apply, and can be relied on to make GST-free supplies instead of section 38-260. Therefore, the definition of 'retirement village' for GST purposes is only applicable in meeting the requirements of specific concessional provisions in the GST Act (that is, subsection 38-25(3) and section 38-260). It has no effect on any other legislation that refers to the term 'retirement village'.
13. Paragraph 1.1 of the Explanatory Memorandum to the Tax Laws Amendment (Retirement Villages) Bill 2004 explains that the amendments: ·
· ensure that supplies of care services and accommodation are GST-free when supplied to residents of serviced apartments of retirement villages that require and receive daily living activities assistance or nursing services;4 and
· provide that supplies of accommodation, services related to accommodation, and meals are GST-free if provided by a charitable retirement village to a resident of such a retirement village.5
In regards to section 38-25 of the GST Act, you do not supply the services that this section deals with and your retirement village is not an aged care facility and therefore this section is not applicable to your situation.
In regards to section 38 250 and 38-260 of the GST Act both of these sections require the entity applying the provisions to be one of the following:
· a charitable institution;
· a trustee of a charitable fund;
· a gift-deductible entity or;
· a government school.
In your case, you are not operating as an entity of the type listed above and do not have access to the status of these entities. Therefore, you cannot access these provisions.
As your supplies are residential accommodation as per section 40-35 of the GST Act and none of the GST-free provisions apply to your situation, your supplies of leased accommodation will be input taxed.