Legislation to implement GST self-assessment regime introduced into Parliament, Draft GST Ruling issued on GST treatment of fees and charges payable on exit by residents of a retirement village

Today the Indirect Tax Laws Amendment (Assessment) Bill 2012 was introduced into the House of Representatives.  The Bill introduces a self-assessment regime for GST and other indirect taxes.  The legislation is to operate from 1 July 2012.

The Bill can be accessed here.

The Explanatory Memorandum can be accessed here.

Also, the Commissioner published Draft GST Ruling GSTR 2012/D2: GST treatment of fees and charges payable on exit by residents of a retirement village operated on a leasehold or licence basis.  Comments are invited on the draft ruling by 16 April 2012.

The draft ruling states that exit payments are treated as supply of residential premises, except to the extent that an objective assessment in all the circumstances indicates that they are consideration for some other supply or supplies.  Supplies of residential premises in a retirement village by way of lease or licence are input taxed unless the supply of the premises is a supply of services apartments that are GST-free under s 38-25(4A).

An exit payment will be consideration wholly for supplies that would be input taxed where:

  • the operator does not provide services other than incidental services; or
  • the operator provides non-incidental services, but the resident is liable to provide separate consideration for them and the value of that consideration is not significantly less than the market value of the services.

An exit payment will be treated as consideration wholly or partly for supplies that would be taxable where:

  • the operator provides non-incidental services (which are non GST-free), but the resident is not liable to provide any separate consideration for those services; or
  • the value of the separate consideration provided is significantly less than the market value of the services.

Where an exit payment is consideration for both non-taxable (input taxed or GST-free) and taxable supplies, or consideration for a mixed supply, the exit payment should be apportioned on a reasonable basis.

The draft ruling also refers to the types of supplies which may be input taxed, GST free or taxable:

  • input taxed supplies to the resident may include supplies of the residential premises by way of lease or licence, and services which are integral, ancillary or incidental to the lease or licence – the ruling contains a non-exhaustive list of incidental services
  • GST-free supplies include supplies of care services and services apartments by an operator when ss 38-25(3) and 28-24(4A) apply
  • taxable supplies may be made to the resident including services which are non incidental services and are not GST-free – this may include optional services which have not necessary connection to the resident’s ability to enjoy residential premises under the lease or licence – the ruling contains a non-exhaustive list of non-incidental services

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s