The aged care sector is growing more and more attractive for business with demographics highlighting an increasing demand for the product.
The over sixty-five population is increasing and the longevity projections support that people are living longer with the average age increasing from sixty-three years in 1928 to eighty-four years projected for 2048. This puts pressure on the demand for senior housing options.
The aged care and retirement sector is littered with a variety of accounting, income tax and GST issues that stem from the sector’s unique regulatory framework. At WMS, we have industry recognised specialists that provide comprehensive advice and assistance to ensure that these complexities are considered. One of our partners addresses the UDIA membership in formal seminars on technical taxation issues in this area.
Specific accounting issues that we advise on in this sector include:
Recognition of revenue;
Recording of ‘Deferred Management Fee’ income;
Recording of loans to residents under a loan lease scenario; and
Income tax issues that we advise on in this sector include:
Structuring and other income tax consequences that stem from the various structures that exist in the aged care sector;
Strata arrangement models; and
Non strata models – loan / lease arrangements and loan / license arrangements.
GST issues that we advise on in this sector are complex. There are significant GST contrasts depending on a variety of issues such as the health of the residents, the type of services provided and the type of housing products provided by the operators. Each product offering has a unique GST treatment to consider.
At WMS we advise clients on potential GST pitfalls, treatments and various GST entitlements for these structures.