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Tuesday, 14 February 2012
Page: 1321

Retirement Villages and Aged Care Facilities

(Question No. 637)

Mr Tony Smith asked the Assistant Treasurer, in writing, on 11 October 2011:

(1) Why is the Government imposing significant GST liabilities on developers of retirement villages.

(2) Has the Treasury estimated the potential increase in GST revenue as a result of the Productivity Commissioner’s recent change of approach to increase the GST burden on developers of retirement villages; if so, does this modelling take into account the cost to the economy of the anticipated reduction in construction of retirement villages and aged care facilities.

(3) Why is the Government seeking to collect more GST revenue from developers of retirement villages, which more often than not incorporate aged care facilities and may lead to reduced development in an industry where it is acknowledged that there is a greater need for such facilities in Australia.

(4) Why is the Government seeking to collect GST in excess of 10 per cent, and potentially up to 100 per cent, of the cash actually received for the sale of a newly developed retirement village.

(5) Has the Government modelled the cost of additional public housing to fill the gap left by reduced retirement village construction in the private sector.

(6) Has the Government estimated the additional costs on State and Territory governments to provide more affordable housing for older people as a result of the impact of this additional tax on retirement village development.

Mr Shorten: The answer to the honourable member's question is as follows:

(1), (3) and (4) The Government is not imposing any additional GST liabilities on developers of retirement villages. Rather, the Commissioner of Taxation issued a public ruling clarifying that the value of all benefits - not just the cash amount - obtained by a vendor as a result of a sale of a retirement village is subject to GST. The rate of GST, which applies to all taxable supplies, is 10 per cent of the value of the supply.

(2) The increase in GST revenue collections arising from the Commissioner of Taxation’s ruling was estimated. The modelling undertaken does not take into account any wider impact on the economy.

(5) No.

(6) No. However, under the Intergovernmental Agreement on Federal Financial Relations, all of the revenue from the GST goes to the States and Territories.