Private ruling: GST - implications
Date of advice: 1 May 2026
Published: 13 July 2026
Ruling period: DD MM YYYY to DD MM YYYY
Date scheme commenced: DD MM YYYY

Ruling: Q1: Is the contemplated sale of the land & buildings of a Retirement Village be a supply or transfer of a capital asset within the meaning of and for the purposes of section 188-25 of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act) and disregarded for the purposes of calculating projected turnover. | A1: Yes. The contemplated sale of the land and buildings known as the Retirement Village will be the transfer of ownership of a capital asset of the Trust for the purposes of section 188-25(a) of the GST Act and is therefore disregarded when calculating projected GST turnover. In the alternative, the sale would also be disregarded under section 188-25(b) as the supply would arise solely as a consequence of the Trust substantially and permanently reducing or ceasing its leasing enterprise. | Q2: If the answer to question 1 is yes, absent any other taxable supplies in current or projected turnover that would exceed the threshold, that the taxpayer does not meet the registration turnover threshold and is not required to be registered under section 23-15 of the GST Act in regard to the contemplated sale. | A2: Yes. As concluded in Question 1, the contemplated sale of the Retirement Village is disregarded in calculating the Trust's projected GST turnover under section 188-25 of the GST Act. As the Trust does not make any other taxable supplies that, when taken together with its current or projected supplies, would meet or exceed the $75,000 registration turnover threshold in section 23-15, the Trust does not meet the registration turnover threshold and is not required to be registered for GST in relation to the contemplated sale. | Q3: Where the answer to questions 1 & 2 is yes, does it follow that disposal of the subject property as contemplated will not be a taxable supply under section 9-5 of the GST Act as the taxpayer is not registered or required to be registered (9-5(d)). | A3: Yes. As concluded in Questions 1 and 2, the contemplated sale of the Retirement Village is disregarded when calculating projected GST turnover as per section 188-25 of the GST Act and the Trust does not meet the registration turnover threshold in section 23-15. As a result, the Trust is not registered and is not required to be registered for GST. Accordingly, paragraph 9-5(d) of the GST Act is not satisfied, and the contemplated disposal of the Retirement Village will not constitute a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances: Taxpayer and GST Status The XXX Pty Ltd as trustee for the XXX Trust (the Trust) is the legal owner and operator of the XXX Retirement Village (the Retirement Village). The Trust is not, and has never been, registered for GST. Nor has the Trust claimed GST credits in relation to the Retirement Village. The Principal of the Trust also has interests in other retirement villages. The other villages follow the same business model. The only difference is the quality of units and the amount on the property. However, the Retirement Village is the sole subject of this ruling as it is considered a new residential premise, as it began leasing in 20YY. The Retirement Village In response to the RFI request, multiple contracts were provided alongside a response document answering individual questions. The RFI response document (the RFI Response) explains the makeup of the Retirement Village. The Retirement village is located at XXX. It comprises independent living units (ILUs). It was constructed prior to and first leased in 20YY and has had less than five years of input taxed residential leasing use. There are no serviced apartments and no dedicated aged care accommodation at the Retirement Village. Residency is restricted to persons aged 55 years or more, as confirmed on the website. The Retirement Village residents have access to a range of communal facilities, including: • Community Centre • Indoor Pool • Gymnasium • Games room • Theatre Room • Bowling Green • BBQ Area Optional services such as cleaning, meals and personal care may be provided to residents for an additional fee. Operation of the Retirement Village: XXX Pty Ltd, as legal owner, is the Operator of the Retirement Village (the Operator). When a resident moves into the Retirement Village, a lease agreement is entered between the residents and the Operator. A sample lease agreement was provided (the Lease Agreement). The Lease Agreement provides that residents do not acquire ownership of their unit. Instead, residents are granted a right to occupy the premises on the terms of the agreement. YYY Pty Ltd acts as the manager of the Retirement Village (the Manager). Residents enter into a Services and Facilities Agreement with the Operator and the Manager, governing access to communal facilities and services. A sample Services and Facilities Agreement was also provided. Ownership and Leasing of the Retirement Village: The Trust holds the freehold interest in the land and buildings comprising of the Retirement Village. All ILUs are occupied under standard loan-lease arrangements. Under these arrangements, residents advance an interest-free loan to the Operator in connection with their right to occupy a unit. The Trust treats lease fees and deferred management or exit fees as input taxed supplies of residential premises. No GST-free serviced apartments or taxable accommodation supplies are provided at the Retirement Village. A sample loan agreement was provided (the Loan Agreement). Clause XX of the Loan Agreement sets out the terms of the resident loan, including the amount advanced and payment timing. No interest is payable on the loan. Clause ZZ of the Loan Agreement provides that the loan is repayable to the resident upon termination of the occupancy, either in accordance with section 180(2) of the NSW Retirement Villages Act 1999 or within five years of termination of the lease, whichever occurs first. Accounting and Financial Treatment of the Retirement Village: The financial report for the Trust, for the year ended 30 June 20YY, was provided (the Financial Report). The profit and loss statement shows income derived from: • Net Departure fees • Interest income • Other income • Share of partnership profit/loss Expenses include, among other items, depreciation, repairs and maintenance, recurrent fee levies, insurance, and professional fees. The balance sheet records land and buildings as fixed assets. Non-current liabilities include amounts referable to resident loan and lease arrangements. Intention and reason for sale At the time of acquisition and development, the Retirement Village was intended to be held on a long-term basis and used to generate income through resident turnover and deferred management fees. The Trust has never sold a retirement village. The decision to contemplate the sale of the Retirement Village, together with the other retirement villages, is motivated by estate and succession planning considerations of the Trust's principal. Status of proposed sale As noted in the RFI Response, all the retirement villages are intended to be offered for sale in the near future. Any sale of the Retirement Village is expected to be by way of a contract for sale of the land and buildings, including fixtures and common facilities, subject to existing long-term ILU leases. Resident and common area furniture and facilities are expected to be included. No sale contracts have been prepared, and no formal sale process has yet commenced. It is proposed that the sale of the Retirement Village would not be treated as a taxable supply, on the basis that the Trust is not registered nor required to be registered for GST. The Trust is also considering the possible separate sale of the village operating business, including office furniture, equipment and other chattels.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 9-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 9-20(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 subsection 23-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 23-15 | A New Tax System (Goods and Services Tax) Act 1999 subsection 40-5 | A New Tax System (Goods and Services Tax) Act 1999 subsection 40-35(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-10 | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-15 | A New Tax System (Goods and Services Tax) Act 1999 subsection 188-25(b) | A New Tax System (Goods and Services Tax) Act 1999 subsection 195-1

Reasons for decision: Summary: All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 unless otherwise noted. Section 188-25 of the GST Act provides that, when working out an entity's projected GST turnover, the following supplies are to be disregarded: • any supply made, or likely to be made, by way of transfer of ownership of a capital asset; and • any supply made, or likely to be made, solely as a consequence of: - ceasing to carry on an enterprise; or - substantially and permanently reducing the size or scale of an enterprise. Each paragraph operates independently. Satisfaction of either paragraph is sufficient to exclude the supply from projected GST turnover. In this case, both paragraphs are considered, although reliance on both is not necessary to reach a conclusion. Before applying section 188-25, it is necessary to determine whether the entity is carrying on an enterprise and to identify the nature of that enterprise. | Detailed Reasoning - Nature of the activities - existence of an enterprise: Section 9-20(1)(c) defines an enterprise to include relevantly: • an activity, or series of activities, carried on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property. An example lease agreement was provided by the Retirement Village. Within the lease agreement, the occupants do not acquire ownership of the premises. The entity retains ownership of the land and buildings at all times, and occupants are granted a contractual right to occupy residential premises. The Retirement Village rents the ILUs through loan/lease agreements. The associated loan arrangements demonstrate that occupants provide an interest-free loan in connection with their right to occupy a unit and access communal facilities. These arrangements do not confer any proprietary interest in the land or buildings. Accordingly, the entity carries on an enterprise consisting of the regular and continuous leasing or licensing of rights to occupy residential premises within the meaning of section 9-20(1)(c). | Detailed Reasoning - Characterisation as a retirement village: Section 195-1 defines a retirement village as premises where: • the premises are residential premises; • accommodation is intended for persons aged 55 years or over; and • communal facilities are provided for residents. The Retirement Village comprises of Independent living units (ILUs). ILUs constitute residential premises for GST purposes, as confirmed in Goods and Services Tax Ruling 2012/5. The premises are restricted to occupants above 55 years old, and communal facilities are provided, the development satisfies the characteristics of a retirement village. The characterisation of the premises as a retirement village supports the concept of an enterprise being undertaken through the leasing of the ILUs; but is not a necessary factor. | Detailed Reasoning - Whether the asset is a capital asset - section 188-25(a): The term capital asset is not defined in the GST Act and therefore takes its meaning from general tax law principles. It is established that capital assets are those forming part of the "profit-yielding subject" of an enterprise ( United Collieries Ltd v Inland Revenue Commissioners (1930) SC 215 at 220, per Lord Blackburn). This is in contrast with revenue assets, which are acquired for disposal in the course of profit-making activities (Sun Newspapers Ltd v FC of T (1938) 61 CLR 337 at 359 ( Sun Newspapers )). Here, the asset in question is what is being sold - the land including fixtures as encumbered by the ILU loan/leases. Accordingly, whether the Retirement Village constitutes a capital asset depends on the nature of the Trust's enterprise and the role of the Retirement Village within that enterprise - specifically, whether the Retirement Village forms part of the structure by which income is earned, rather than being held for disposal as part of a profit-making scheme. Paragraph 201 of the Miscellaneous Taxation Ruling 2006/1 (MT 2006/1) explains that, in determining the nature of an enterprise and its assets, regard must be had to the commercial context of the activities. Assets used on a regular or continuous basis to carry on a leasing enterprise are typically capital in nature, rather than trading stock. There is no single determinative test. The character of an asset is assessed having regard to objective indicators, including intention at acquisition, manner and duration of use, and the income-earning process. | Detailed Reasoning - 1.Intention at acquisition: In the context of retirement villages, paragraph 52 of Taxation Ruling 2002/14 (TR 2002/14) states that where a village is not trading stock of the village operator, and the costs of development or acquisition are capital in nature, the proceeds from the sale of the village are also capital in nature. Based on the facts, the retirement village was acquired and developed with the intention of being held long term and used to generate income through a retirement village leasing enterprise. There is no evidence that the village was acquired or developed for resale or as part of a profit-making scheme. The contemplated sale arises from estate and succession planning considerations and does not indicate a change in the nature of the Trust's activities or an intention to trade in retirement villages. The Trust's continued ownership of other retirement villages under the same loan-licence model further supports this conclusion. The Trust's consistent ownership and operation of other retirement villages, under the same loan-licence model, reinforces the conclusion that the Retirement Village was intended to form part of a continuing business structure. This conclusion accords with the capital characterisation described in Sun Newspapers and reflected in MT 2006/1 and TR 2002/14. | Detailed Reasoning - 2.Manner and duration of use: Paragraph 249 of MT 2006/1 explains that assets held as trading stock are commonly acquired for resale within a comparatively short period, whereas capital assets are typically held and used on an ongoing basis in an enterprise. Construction of the retirement village was completed and leasing commenced in 20YY and has, since that time, been continuously used in a loan/licence retirement village enterprise. Residents occupy ILUs under long-term arrangements, and the Trust has retained ownership of the land and buildings at all times. Paragraphs 52 to 55 of TR 2002/14 describe retirement village arrangements in which the operator retains ownership of the real property and derives income from granting occupation rights and managing the village over time. Under such arrangements, the village forms part of the operator's enduring business structure rather than being an item of stock for resale. Here, the use of the Retirement Village is to conduct the business of leasing ILUs. Whilst the village began leasing in 20YY, no evidence suggests that the retirement village was developed to be resold quickly. The manner and duration of use support the conclusion that the Retirement Village is a capital asset. | Detailed Reasoning - 3.Income Earning Process: A further indicator of capital character is whether profits are derived from the use of an asset over time rather than from its disposal. The Trust derives income from the Retirement Village through loan-licence arrangements, deferred management fees, and related operational charges. The Trust has non-current liabilities in the form of resident loans, which are repayable upon residents' exit under the loan agreements. These obligations exist solely because the Trust owns and leases the Retirement Village and reflect the enduring nature of the enterprise. The income-earning process is therefore the ongoing occupation and leasing of the Retirement Village, not the trading of land or buildings. This is consistent with an asset forming part of the profit-yielding structure described in Sun Newspapers and with a leasing enterprise as contemplated by section 9-20(1)(c). | Detailed Reasoning - Conclusion under section 188-25(a): Having regard to the intention at acquisition, the manner and duration of use, and the income-earning process, the Retirement Village constitutes a capital asset of the Trust. Accordingly, the contemplated sale is a supply by way of transfer of ownership of a capital asset and is disregarded in calculating projected GST turnover under section 188-25(a). In the alternative, section 188-25(b) is also considered below. | Detailed Reasoning - Cessation or reduction of the Enterprise - section 188-25(b):: The Retirement Village is legally owned by XXX Pty Ltd as trustee for the XXX Trust. The proposed transaction involves the transfer of legal and beneficial ownership of the land and buildings. The operating company does not hold any proprietary interest in the assets and is not proposed to be sold at this time. The Trust's enterprise consists of leasing ILUs. The sale of the land and buildings comprising the Retirement Village would therefore substantially and permanently reduce the size and scale of that leasing enterprise. Where all villages are sold, the Trust would cease to carry on that enterprise altogether, as it would no longer own any leasing assets. The proposed sale arises solely from estate and succession planning and not as part of any restructuring or expansion of business activities. The Trust will not retain any leasing assets following the sale and will not carry on any substitute enterprise. Where the Retirement Village is sold in isolation, the Trust's enterprise would be substantially reduced but not ceased. However, where the retirement village and the remaining villages are sold contemporaneously, the Trust will no longer own any land or buildings capable of being used in its retirement village enterprise. This would cease the enterprise of leasing the ILUs. In those circumstances, the supplies would be made solely as a consequence of permanently reducing the size or scale of, or ceasing to carry on, the enterprise and would therefore also be disregarded under section 188-25(b)(i ) . | Detailed Reasoning - Question 2: If the answer to question 1 is yes, absent any other taxable supplies in current or projected turnover that would exceed the threshold, that the taxpayer does not meet the registration turnover threshold and is not required to be registered under section 23-15 of the GST Act in regard to the contemplated sale. | Detailed Reasoning - Answer: Section 23-5 states that GST registration is required if: (a) you are carrying on an enterprise; and (b) your GST turnover meets the registration turnover threshold. Both subsections (a) and (b) must be satisfied in order to require GST registration. | Detailed Reasoning - Carrying on an enterprise: As established under question 1, the Trust is carrying on an enterprise through section 9-20(1)(c). The enterprise is through the leasing and licensing of ILU residences in the Retirement Village. This satisfies subsection (a) of section 23-5. | Detailed Reasoning - GST turnover and the registration threshold: The registration turnover threshold referred to in subsection 23-5(b) is defined in section 23-15, which states: (1) Your registration turnover threshold (unless you are a non-profit body) is: (a) $75,000; or (b) such higher amount as the regulations specify. (2) Your registration turnover threshold if you are a non-profit body is: (a) $150,000; or (b) such higher amount as the regulations specify. As concluded under Question 1, the contemplated sale of the Retirement Village is disregarded in calculating the Trust's projected GST turnover under section 188-25 on the basis that the supply is a transfer of a capital asset or, in the alternative, arises solely as a consequence of the Trust substantially and permanently reducing or ceasing its leasing enterprise. The Trust's remaining supplies arise from the ongoing use of the Retirement Village in a leasing enterprise. These supplies comprise the grant of rights to occupy ILUs, as evidenced by the lease/loan agreements, and the receipt of deferred management fees, exit fees, and interest income, as reflected in the Trust's profit and loss statements. The grant of rights to occupy the ILUs constitutes a supply of residential premises by way of lease or licence and is input taxed under section 40-35(1)(a). Deferred management fees and exit fees are not separate supplies for GST purposes. Consistent with the Commissioner's views in TR 2002/14 and GSTR 2012/5, these amounts are ancillary or incidental to the right to occupy the unit, and their GST treatment follows that of the principal supply. As the principal supply of residential accommodation is input taxed, deferred management fees and exit fees are also input taxed. Interest income derived by the Trust is a financial supply. Section 40-5 of the GST Act provides that financial supplies are input taxed, and Goods and Services Tax Ruling 2002/2 specifically includes the provision of credit and the earning of interest within the definition of a financial supply. Interest income earned by the Trust is therefore input taxed. Input taxed supplies are excluded from current and projected GST turnover under section 188-15. Any optional services, such as cleaning, meals or personal care, are supplied on a user-pays basis and are not integral to the accommodation arrangements. The total consideration for any such taxable supplies does not exceed $75,000 in any 12-month period. Accordingly, the Trust's current and projected GST turnover does not meet the registration turnover threshold. | Detailed Reasoning - Question 3: Where the answer to questions 1 & 2 is yes, does it follow that disposal of the subject property as contemplated will not be a taxable supply under section 9-5 of the GST Act as the taxpayer is not registered or required to be registered (9-5(d)). | Detailed Reasoning - Answer: As this contemplated sale of the Retirement Village will be a disposal of an asset, section 9-5 of the GST Act must be analysed to determine whether the sale will be a taxable supply. Section 9-5 states that: You make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone; and (d) you are registered, or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. For section 9-5 to be applicable, all four subsections must be satisfied. As set out in the above question 2, the Trust is not registered, nor is it required to be registered. Hence, 9-5(d) is not met. The sale of the Retirement Village will not be a taxable supply.