- GST: Common corridor ruling defines ‘retirement villages’ classification
On 13 January 2016, the ATO released for comment a Draft Addendum to GST Ruling GSTR 2012/3 (GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels). The ATO has also released a draft consolidation of GSTR 2012/3 incorporating the Draft Addendum.
GSTR 2012/3 broadly explains when services and accommodation provided to residents in privately funded nursing homes, aged care hostels and serviced apartments in a retirement village are GST-free. Supplies of services (which include daily living and nursing) and accommodation to residents of a retirement village can be GST-free supplies if they meet a number of requirements. One of the requirements is that the recipient of the supplies be a resident of a retirement village, living in a ‘serviced apartment’.
The definition of ‘serviced apartment’ currently requires that, amongst other things, the apartment is:
- designed to be occupied by aged residents requiring nursing and/or daily living assistance; and
- part of a single complex of apartments and accessible from a common corridor linking the apartment to the other apartments in the complex.
Previously in GSTR 2012/3, ’common corridor’ was not considered to include covered passageways that connected a serviced apartment to another serviced apartment. However, the Draft Addendum now proposes to amend GSTR 2012/3 to broaden the Commissioner's view on the meaning of the phrase.
The common corridor definition is proposed to be broadened to include a covered passageway which is lit, provides protection from the elements and is wide enough to allow passage of mobility assistance devices such as walkers, scooters and wheelchairs. A covered passageway, either alone, or in combination with an internal passageway, must provide access to and between all apartments in the single complex to meet the definition. A covered or uncovered passageway that connects a freestanding apartment to another freestanding apartment is not a common corridor.
Assuming that this addendum will be finalised without any further amendments, the ‘serviced apartment’ definition might also be able to be applied to more retirement village apartments than was previously the case. This may ultimately allow entities providing services and accommodation to residents of serviced apartments in retirement villages to treat more of their supplies as GST-free.
Comments on the ruling are due by 26 February 2016.