An investor's guide to the sector and its regulations.
Minter Ellison is one of the few Australian law firms to have a dedicated national retirement village and aged care practice.
We have acted for the industry for more than 25 years, managing the acquisition and disposal of retirement villages and facilities in every State of Australia. During this time we have also provided a comprehensive range of legal services including structuring/start-ups, scheme document drafting, ongoing management of villages and regulatory compliance. Our experience comes from advising many of Australia's major retirement village and aged care developers and through having also acted for large Australian banks in relation to funding in this sector.
Our team understands the sector, its needs, relevant government policy and legislative requirements. We provide proactive and prompt assistance to industry participants on a variety of compliance issues including specialised consideration of the relevant legislation.
The Full Federal Court handed down its appeal decision in MBI Properties Pty Limited v Commissioner of Taxation [2013] FCAFC 112 on 18 October 2013, regarding the GST consequences arising from the sale of leased residential property as a going concern.
The Retail Leases Regulations 2013 (VIC) came into effect on 22 April 2013. Its effect was to replace the former multi-function Victorian disclosure statement with four separate disclosure statements which are to be used in specific situations. While there is a degree of logic in this approach, it is disappointing that Victoria has now seemingly stepped away from a national approach by acting unilaterally. This article sets out ten things that individuals preparing or reviewing disclosure statements should know.
The New South Wales Government released today a regulation which prescribes the use of a standard form of retirement village contract, a general inquiry document and a revised disclosure statement. Use of these new documents is mandatory from 1 October 2013.
Important amendments have been made to the Retirement Villages Act 1986 (VIC) introducing stringent disclosure requirements on owners and operators of retirement villages in Victoria. The amendments enable prospective residents to better compare retirement villages before signing a contract.
The Retirement Villages Act 2012 (ACT) commenced on 4 March 2013, and while there was some question as to whether they would be ready on time, the Retirement Villages Regulations 2013 became available on the same day and are now also in effect.
The Act replaces the Fair Trading (Retirement Village Industry) Code of Practice 1999 and sets out the rights and obligations of residents and operators of retirement villages. It will apply to all prospective and current retirement village residents and operators in the ACT, but does not apply to 'aged care facilities' which are regulated by the Commonwealth Aged Care Act 1997.
On 31 December 2012, the China International Economic and Trade Arbitration Commission (CIETAC), a foreign-related arbitration commission set up by the China Council for the Promotion of International Trade (also known as the China Chamber of International Commerce) (CCPIT), released its Announcement on Issues Concerning CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission" (the Latest Announcement). This is the latest development in a dispute, which has been on foot since April 2012, between CIETAC, the Shanghai Sub-Commission of CIETAC (CIETAC Shanghai), and the Shenzhen Court of International Arbitration (SCIA) (the CIETAC Dispute). SCIA was known as the South China Sub-Commission of CIETAC before 22 October 2012.
The Retirement Villages Amendment Bill 2012 (Bill) was passed by the Western Australian Parliament on 23 October 2012 and is awaiting assent.
Operators of retirement villages in Victoria should be aware that the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA) commenced on 1 July 2012. The ACLFTA repeals the Fair Trading Act 1999 (Vic) and re-enacts its provisions in a restructured and consolidated form. There are also some new provisions, such as increased capacity for disputes involving small businesses to be referred for conciliation or mediation by the Director of Consumer Affairs Victoria.
In May 2011, the Administrative Appeals Tribunal (AAT) decided in Re The Retirement Village Company and FCT [2011] AATA 298, that a retirement village operator could claim a tax deduction for exit payments (which included a 'capital appreciation sharing payment') made under resident contracts (and which had been acquired as part of the acquisition of the retirement village). The Australian Taxation Office (ATO) has now issued a Decision Impact Statement on the AAT decision, which broadly seeks to limit the application of the AAT decision to the particular facts. Given the ATO does not appear to accept that the AAT decision has precedential value, we recommend the ATO seek a test case to provide the retirement village sector with some certainty on these important tax and commercial issues.
The Australian Taxation Office (ATO) has recently issued a draft public ruling GSTR 2012/D2 (Draft Ruling) in relation to the GST treatment of retirement village exit fees. The Draft Ruling will affect both charitable and commercial operators of loan-lease retirement villages.
On 29 November 2011 the Queensland Government enacted the Civil Proceedings Act 2011 (Qld). Included in the Act are important amendments to the Retirement Villages Act 1999 (Qld) in relation to the calculation of exit fees for Queensland retirement villages. A new section 53A ('How to work out particular exit fee for a residence contract') has been inserted into the Retirement Villages Act 1999 (Qld). This section applies to all residence contracts that require the resident to pay to the scheme operator an exit fee that is calculated having regard to the length of time the resident resides in their unit.
On Tuesday, 29 November 2011, as part of its Mid-Year Economic and Fiscal Outlook 2011-12, the Federal Government announced a package of changes intended to raise A$11.5 billion in new revenue and savings.
The Supreme Court of New South Wales recently held that certain clauses in services deeds between a manager and residents of a retirement village (under which residents gave the manager an exclusive sole agency and right of sale of residents' lot) were void because they were inconsistent with provisions of the Retirement Villages Act 1999 (NSW) (Act). This meant that on a proper construction of the services deeds the manager could not enforce a clause entitling it to a 'management profit' upon sale of the lots.