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Tax Issues in Building and Operating Retirement Villages

Published on 07 Sep 2005 | Took place at Holiday Inn Adelaide , SA

The income tax and GST treatment of retirement villages is unique and highly complex.

From an income tax perspective the ATO issued Taxation Ruling TR 2002/14 Taxation of Retirement Village Operators on the 28 June 2002 to replace Taxation Ruling TR 94/24. Three years on, retirement village operators and their taxation advisers are in many cases still no closer to clarifying many of the unique tax issues that arise from both these rulings.

The GST issues faced by the industry are also difficult, albeit that the ATO has released a significant amount of information on the topic in recent years. Whilst the ATO has removed the GST uncertainty for non-profits by ensuring their retirement village supplies are GST free the practical difficulties for other operators remain.

The purpose of this seminar was to address these taxation and GST issues and where possible draw on practical experiences over the last three years to provide further guidance.

The seminar also covered the legal issues specific to the industry, including drafting resident documentation in accordance with Taxation Ruling TR 2002/14.

Get a 20% discount when you buy all the items from this event.

Individual sessions

Retirement villages - establishment and operational issues

Author(s):  Brian NIMMO

Topics covered in this paper include:

  • developer versus operator
  • new villages and receipt of initial funds from residents
  • capital versus revenue distinction - resident contracts
  • lease premium versus resident loan
  • deferred management fees, share of capital gain/(loss)
  • sinking fund and capital replacement fund issues - trust funds
  • tax planning and structure issues
  • sale of villages - capital gain or revenue
  • resident liabilities
  • transitional issues TR 2002/14 versus TR 94/24.
Materials from this session:

Retirement villages - GST issues

Author(s):  Kristian THOROUGHGOOD

Topics covered in this paper include:

  • leasing arrangements
  • sales of units
  • services provided
  • recent developments
    • serviced apartments
    • charitable exemptions
    • pricing and the ACCC rules.
Materials from this session:

Retirement villages - legal issues

Author(s):  Trevor EDMOND

Topics covered in this paper include:

  • statutory obligations under retirement villages acts
  • drafting resident agreements
  • loan / licence versus lease premium
  • recurring charges - deferred management fees
  • trust funds - sinking funds and capital replacement funds
  • legal issues for sale and purchase
  • assignment of resident liabilities on sale
  • practical legal issues for transitional rules
  • stamp duty - sale and purchase.
Materials from this session: