Australia: Aged Care & Retirement Villages Update

Last Updated: 26 May 2009


  • NSW Tribunal Decides On Allocation Of Costs Between Villages
  • Guide to legislative framework for villages and nursing homes

NSW Tribunal Decides On Allocation Of Costs Between Villages
by Arthur Koumoukelis

With the continued growth and consolidation of the retirement village industry, it is inevitable that more and more operators will operate across state boundaries and multiple facilities. They will as a result, continue to incur costs that relate to the establishment of the portfolio but at the same time generate benefits for residents through economies of scale, branding, security and choice.

At the same time, residents have been concerned to ensure that only costs relating to their village may be passed on to them.

These costs are typically in the nature of administration costs or imposts such as payroll tax. Both affect for profit and not for profit operators.

These matters have given rise to much discussion between operators and residents particularly as reviews of the legislation have occurred as has been the case in New South Wales.

Most relevantly, up until now, there have been conflicting decisions in Queensland and New South Wales as to an operator's entitlement to recover the impost of payroll tax from residents as part of the general services in their maintenance charges. Queensland cases say you can, New South Wales decision said you could not.

Both operators and residents have been waiting for clarification as to operation of the relevant Retirement Villages Act to explain the position and provide guidance.

On 21 May 2009, the New South Wales Consumer, Trader & Tenancy Tribunal handed down its decision in the matter of Australian Retirement Homes (No 2) Pty Ltd v Minkara Retirement Villages Resident Committee RV 08/41351 which has provided clarity for all parties as to the principles involved in incurring and allocating costs across numerous facilities. gadens lawyers acted for the operator in the case.

That decision has brought the New South Wales position in line with the Queensland position to confirm that the impost of payroll tax that was included by the operator in its statement of proposed expenditure for the financial year ended 30 June 2009, could form part of the statement of proposed expenditure.

click here to view a copy of the decision.

The principle that is relevant to both residents and operators is that it confirms the Retirement Villages Act and Regulation is structured to ensure transparency and fairness to both in that the Act envisages a person may be the operator of more than one village and can apportion the expenditure between the villages as long as the method of calculation of apportionment is disclosed.

In the particular case, the Tribunal accepted that the obligation to pay payroll tax as a result of the corporate structure of the applicant to be an item that can be recurrent charge in respect of wages and salaries and part of the proposed expenditure.

Though the case dealt predominantly with payroll tax, it assists the industry to emphasise that the Act does work to confirm such costs can be passed on but in doing so, ensure transparency of information to residents as to the costs of living in the village.

Guide to legislative framework for villages and nursing homes
By Arthur Koumoukelis

With many new participants in the industry and the convergence of care into villages and aged care operators looking at retirement villages, it becomes more important for those new entrants and new employees working in the industry to understand the difference between a nursing home and a village and what they both mean.

To assist new entrants into the industry, gadens lawyers has prepared a brief outline of the legislative framework regulating retirement villages and nursing homes which can be found here.



Arthur Koumoukelis

t (02) 9931 4873


John Fairgray

t (02) 9931 4817


Matthew Mallos

t (02) 9931 4898




Doug Scobie

t (03) 9252 7760




Judd Last

t (07) 3231 1606


Stafford Hopewell

t (07) 3114 0232




Martin Matthews

t (08) 9323 0950


Ian Compton

t (08) 9323 0947




Julia Sweeney

t (08) 8233 0630


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