This GST Ruling, released on Wed 15.8.2012, sets out the Commissioner’s views on the treatment of exit payments which a resident becomes liable to pay to the operator of a retirement village when the resident’s interest in the village terminates.
Among other things, the Ruling states that where the operator does not provide services other than incidental services, the ATO will generally view the exit payment as consideration wholly for supplies that would be input taxed. If the operator does provide non-incidental services, the ATO will also view the exit payment as relating to an input taxed supply if:
- the resident is liable to provide separate consideration for the non-incidental services; and
- the value of that consideration is not significantly less than the market value of the services.
The Ruling was previously released as Draft GSTR 2012/D2 and is broadly the same, although the final Ruling contains more details on the consideration for taxable or GST-free services, and capital appreciation and depreciation amounts.
DATE OF EFFECT: Applies both before and after its date of issue.
[LTN 157, 15/8]