Operators of retirement villages are typically unable to recover the GST incurred on acquisitions relating to the development and operation of the retirement village. Despite these general rules, there are certain circumstances where retirement village operators may be able to recover all GST incurred on the development and operation of the retirement village.
For these purposes, it is important to note that a retirement village is:
- accommodation intended for people at least 55 or older; and
- has communal facilities for the residents to use.
Unlocking the opportunity
Ordinarily, providing accommodation in a retirement village is considered an input taxed supply of residential accommodation. This GST classification restricts the ability of retirement village operators to recover GST on acquisitions related to the development of the retirement village, such as land, materials, construction, and other development fees. Additionally, the recovery of GST is also denied on acquisitions relating to the provision of retirement village accommodation and certain services.
Despite this, there are circumstances where the supply of retirement villages accommodation is GST-free, resulting in entitlement to full GST credits on acquisitions relating to the development or operation of the retirement village. This may arise where:
- You are an endorsed charity that operates a retirement village and make supplies to residents of the retirement village (including accommodation); or
- You are an endorsed charity that makes supplies for “nominal consideration” of less than 75%, or less that 50%, (depending on what is being supplied); or
- You supply a serviced apartment in a retirement village to a resident who needs help with daily living activities or nursing services.
Understanding the GST rules and how they apply to retirement villages can be complex. If you would like assistance to determine how you should be treating your supply of retirement villages for GST purposes and unlock potential refunds, our GST specialists are happy to support you.