On Wednesday 13.1.2016, the ATO issued a Draft Addendum to GST Ruling GSTR 2012/3 on the GST certain services in a ‘serviced apartment’ in retirement villages under s38-25 of the A New Tax System (Goods and Services Tax) Act 1999 (‘GST Act’).

The Draft would GSTR 2012/3 to broaden the Commissioner’s view on the meaning of “common corridor” in para (c) of the definition of “serviced apartment” in s 195-1 of the GST Act. One of the conditions that must be satisfied for an apartment to qualify as a “serviced apartment” is that the apartment is part of a single complex of apartments and is accessible from a common corridor linking the apartment to the other apartments in the complex. This is to distinguish such apartments, from ‘a detached house, row house, terrace house, town house or villa unit’, which are expressly excluded (see definition below).

GSTR 2012/3 currently provides that a common corridor includes internal passageways that connect all of the apartments in a single complex of apartments, does not include covered or uncovered passageways that connect an apartment to another apartment and are outside of the building.

The Draft Addendum states that a covered passageway which provides protection from the elements, is lit and is wide enough to allow passage of mobility assistance devices will qualify as a common corridor if it provides access (whether alone or together with an internal passageway) to and between all apartments in a single complex. However, the Commissioner continues to be of the view that covered passageways which connect 2 freestanding apartments, uncovered passageways, pathways and roads are not common corridors.

The Draft Addendum also provides that the expression “single complex of apartments” in para (c) of the definition of “serviced apartment” refers to a single building.

Where there is more than one single complex in a retirement village, the Commissioner now accepts that para (c) of the definition of “serviced apartment” only requires apartments in a single complex to be accessible from a common corridor and does not require each single complex to also be connected by a common corridor.

COMMENTS on the Draft Addendum are due by 26 February 2016.

[LTN 7, 13/1/16]

Extract from unmodified GSTR 2012/3

  1. This Ruling explains when care services and accommodation provided to residents in privately funded nursing homes, aged care hostels and serviced apartments in a retirement village are GST-free.
  2. In particular, this Ruling explains when supplies of care services and supplies of accommodation to care recipients are GST-free under subsections 38-25(3), 38-25(4) and 38-25(4A) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Extract from the GST Act (A New Tax System (Goods and Services Tax) Act 1999

38-25(4A)  A supply is GST-free if:

(a)      it is made to a person who is a person of a kind referred to in paragraph (3)(c); and

(b)      it is:

(i)      a supply, by way of lease, hire or licence, of *residential premises consisting of a *serviced apartment in a *retirement village; or

(ii)     a sale of * real property that is residential premises consisting of a serviced apartment in a retirement village; or

(iii)    a supply of an excluded security (within the meaning of the Corporations Act 2001 ) in respect of which the right to participate in a retirement village scheme (within the meaning of that Act) entitles the person to use or occupy a serviced apartment in a retirement village; and

(c)      in a case where:

(i)      a determination made for the purposes of paragraph (3B)(a) is in force; and

(ii)     the determination is not restricted under subsection (3C) in such a way that the determination excludes the person;

the * Aged Care Secretary has, in accordance with the determination, assessed the person as requiring the levels of care services determined in the determination; and

(d)      it is made in connection with one or more supplies, or proposed supplies, to the person that are or will be GST-free under subsection (3).

195-1 In this Act, except so far as the contrary intention appears:

serviced apartment : an apartment (however described) is a serviced apartment in relation to a *retirement village if:

(a)      the apartment is designed to be occupied by aged residents who require either or both of the following:

(i)      the services set out in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the *Quality of Care Principles;

(ii)     the services set out in item 3.8 (nursing services) of Part 3 of that Schedule; and

(b)      at least one responsible person is continuously:

(i)      on call to render emergency assistance to the residents of the apartment; and

(ii)     in reasonable proximity to the apartment; and

(c)      the apartment is part of a single complex of apartments to which paragraphs (a) and (b) apply, and is accessible from a common corridor linking the apartment to the other apartments in the complex; and

(d)      there is in the retirement village a communal dining facility that is available for use by the residents of apartments in the retirement village to which paragraphs (a), (b) and (c) apply.

However, a detached house, row house, terrace house, town house or villa unit is not a serviced apartment.