Further tax clarity secured for village operators

Following extensive Retirement Living Council advocacy efforts, the Commissioner of Taxation has issued two Practical Compliance Guidelines which will assist retirement village operators to comply with relevant tax laws, resulting in greater certainty and cost savings.

PCG 2016/14 addresses the fringe benefits tax that applies to a live-in village manager’s housing right.  The Commissioner has allowed a 10 per cent valuation discount when calculating the statutory annual value of the housing right.

PCG 2016/15 outlines a number of practical issues following changes Taxation Ruling TR 2002/14.  The Retirement Living Council secured several wins for operators to simplify tax administration, in response to the Commissioner reversing his long-held view on the deductibility of capital growth payments to outgoing residents.

Download both of these Practical Compliance Guidelines here.

Meanwhile the Administrative Appeals Tribunal in Brisbane has handed down judgement in a GST case where a retirement village operator was the taxpayer. 

In RSPG and Commissioner of Taxation, the Tribunal rejected the operator’s claim for input tax credits after they failed to apply the GST apportionment methodology in a fair and reasonable way.  This resulted in the taxpayer claiming an incorrect amount of credits. 

The operator also unsuccessfully argued that retirement villages should be classed as ‘commercial residential premises’ for GST purposes.

Read the case judgement here.

The Retirement Living Council continues to work hard with the ATO and Treasury to ensure tax laws for the sector are clear, practical and equitable.