Tag Archives: retirement villages

Treasury releases Exposure Draft legislation for Margin Scheme and Subdivided land; Analysis of GSTR 2012/4

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Following on from my post on Monday about the events of last Friday, I note that that on the same day Treasury released an Exposure Draft of legislation intended to clarify the operation of the margin scheme, including a technical amendment to the provision dealing with subdivided land.  Also, to cap off a busy week, the Commissioner published GSTR 2012/4 GST treatment of fees and charges payable on exit by residents of a retirement village operated on a leasehold or licence basis.  My analysis of the Ruling can be accessed here.

Exposure Draft legislation

The legislation seeks to ensure that taxpayers are able to use the consideration method, the valuation method, or the GST-inclusive market value method, whichever is appropriate, when calculating the margin on a taxable supply of subdivided land.

Comments are due by 12 September 2012.

Links to documents:

The Explanatory Memorandum summarises the legislation as follows:

This Schedule removes doubt as to the use of an approved valuation o[f] GST inclusive market value to determine the margin for a taxable supply of a subdivided interest, unit or lease in real property.  This is achieved by amended section 75-15 to expressly allow taxpayers, where relevant, to use a corresponding propotion of (as applicable):

  • the consideration provided for the relevant acquisition of the land or premises from which the interest, unit or lease was subdivided;
  • an approved valuation of the land or premises from which the interest, unit or lease was subdivided as at a specified date;
  • the GST inclusive market value of the land or premises from which the interest, unit or lease was subdivided at a specified time;

to calculate the margin for a taxable supply of a subdivided interest, unit or lease in real property.

A consultation paper was released on 10 December 2010 and 12 submissions were received.  These documents can be accessed below

 

Commissioner publishes Final Ruling on Retirement Villages; Technical Discussion Paper on GST treatment of recovered dishonoured payment costs

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Yesterday the Commissioner published GSTR 2012/4 GST treatment of fees and charges payable on exit by residents of a retirement village operated on a leasehold or licence basis.  The ruling explains the GST treatment of amounts which a resident becomes liable to pay the operator of a retirement village when the resident’s interest in the village terminates (referred to as “exit payments”).  The ruling is limited to where the resident’s interest is a right to possession of residential premises under a lease or licence with a right to use the communal facilities of the village.

The ruling was previously issued as 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.  My post on that draft can be accessed here.  A post analysing the final ruling will be published over the next few days.

Also, on 1 August 2012 the Commissioner released Technical Discussion Paper TDP 2012/1 ‘GST treatment of recovered dishonoured payment costs’.  This is the first TDP dealing with GST that I am aware of, and the aim is to facilitate consultation between the ATO and the community as part of the process of developing a potential ATO view on the application of the GST law. The ATO is seeking comments on its views outlined in the TDP.

The TDP discusses the different possible GST treatments when a dishonour fee incurred by a supplier (after their customer’s payment for supply is dishonoured) is recovered from their customer.  It is noted that publicly available information indicates that Australian businesses are adopting different GST treatments when recovering dishonoured payment fees from their customers, with some appearing to be contrary to the current ATO view – found in GSTA TPP 065 which provides that recovery of dishonoured payment fees may be a financial supply.

The TDP does not consider the GST treatment of the dishonour fee imposed at first instance by a financial institution on a supplier (that is dealt with by the GST Act and GST Regulations).

The TDP is quite extensive, running to some 104 paragraphs, and it deals with questions including:

  • whether dishonour fees are consideration for an interest in a debt;
  • whether dishonour fees are consideration for an interest in credit;
  • whether dishonour fees are consideration for an indemnity interest;
  • whether the recoverable dishonour fees are for the provision of a stand alone facilitation service;
  • whether the recoverable dishonour fees are for a contractual breach;
  • whether the recoverable dishonour fees are additional consideration for an underlying supply.

Comments are sought by 29 August 2012.