What is a retirement village

There are so many options when it comes to moving into a retirement village. Here we explain what some of them are along with the contractual arrangements you may have for each accommodation.

A retirement village is accommodation:

• intended for people who are 55 years or older
• that may be independent living units, serviced apartments, care facilities or a combination of these
• providing services and communal facilities to residents
• operated by government, commercial businesses or as a charitable retirement village by a charitable body.

Retirement villages don’t include residential care as defined in aged care legislation or commercial residential property.

Types of occupancy arrangements

Retirement village contracts aren’t the same as ordinary residential property contracts. A retirement village contract is normally terminated on the death of a resident or when the resident leaves the village, for example, to go to an aged care facility.

Retirement villages offer several different contractual arrangements to residents. The most common types of contracts are:

• long-term leases or licences
• periodic leases
• long-term loan leases or licences
• special share or unit classes
• strata title schemes
• purple titles (tenancy in common).

Long-term leases or licences

A long-term lease in a retirement village will typically be a lease or licence to live in a retirement village for a period of more than 49 years.

The lease doesn’t amount to ownership of the unit or part of the property but is registered on the title deeds of the retirement village.

The contracts are commonly known as lease premium arrangements.

Entry

Commonly in a leasehold situation, an incoming resident pays an entry contribution close to the market value of the dwelling. In return they’re given:

• a long-term lease on that unit
• the right to use the communal facilities in the retirement village.

Upkeep

The residents pay for the upkeep of the communal facilities. This may occur on a continuing basis through a regular fee or levy. The communal facilities remain your property as the operator of the retirement village.

Termination

Depending on the contractual agreements, on termination of the lease the outgoing resident or beneficiaries may be entitled to a lease termination payment. This might be higher than the entry contribution due to capital growth (if there is any entitlement to capital growth or appreciation). Deferred management, refurbishment and other fees (commonly referred to as exit fees) are charged either on the incoming or outgoing price of the dwelling.

Periodic leases

Another form of lease is the prepaid or periodic rental lease, where a resident pays a period of rent in advance.

Entry

Residents with this kind of lease pay a fortnightly or monthly instalment that includes rent and a service fee. The rent is usually calculated in line with government pensions and rent assistance payments. Entry may be subject to a means test for the incoming resident.

Termination

If the lease is terminated before the stipulated years are up, the resident may get a refund for the time remaining.

Strata title schemes

Entry

Residents with strata title to their units are owners and have a separate certificate of title. They may either:

• share as tenants-in-common in the ownership of the communal facilities, or
• be granted rights to the use of communal facilities.

Upkeep

The residents may pay for the upkeep of the communal facilities, on a continuing basis, through a regular fee or levy.

Termination

When the resident leaves the retirement village, the tax consequences depend on the resident’s personal circumstances.

Purple titles (tenancy in common)

Entry

Each resident purchases an equal undivided share or ‘purple title’ in the retirement village. This means every co-owner would have an equal interest in every unit in the village. A resident would then be granted an exclusive use of one of the units in the village. In this way, each resident can occupy a residence to the exclusion of the other co-owners of the village. They don’t own the unit, but they do own a share in the whole property.

Upkeep

The residents may pay for the upkeep of the communal facilities, on a continuing basis through a regular fee or levy.

Termination

When the resident leaves the retirement village, the tax consequences depend on the resident’s personal circumstances.

To find out more about these types of accommodations, contact us for more information.

Source: ato.gov.au February 2025
Reproduced with the permission of the Australian Tax Office. 

Key points:

• My Aged Care will be your first point of contact if you are looking to access Government funded aged care services
• A RAS or ACAT/S assessment can determine what services will best suit your needs
• If you are found eligible for government-funded services, you will then be able to start looking for aged care providers

UPDATE — from December 9, 2024, the Single Assessment System replaced the Regional Assessment Service, independent Australian National Aged Care Classification assessors and ACAT/ACAS specialists. Every approved assessor will be able to deliver an assessment for each level of support, whether in-home or for residential care. More information can be found on the Aged Care Guide website.

The first thing you need to do is register with My Aged Care. This is the agency that looks after all government-funded aged care programs.

When you first call the My Aged Care Contact Centre, on 1800 200 422, an operator will register you and ask you a number of questions about your personal circumstances and care needs.

These questions will be quite basic and shouldn’t take too long. All you will need is your Medicare card when you call as this information is stored with your other details on the My Aged Care database.

Examples of the questions you will be asked are:

• Are you currently receiving aged care services?
• Are you getting support from a carer or family member?
• Can you prepare your own meals and do housework?
• Do you need assistance taking a shower or bath and do you need help getting dressed?
• Are there any health concerns or did you have a recent fall?
• Do you feel lonely or isolated?
• Are there any safety risks in the home?

The aim of this screening is to figure out what needs and support you require and whether you are eligible for a further assessment in person.

Additionally, the information you provide during this quick process will be recorded on your application, so you don’t have to stress about remembering the information you provided during your eligibility check.

If you are worried about doing the eligibility check by yourself, you are allowed to have a family member, friend or carer with you for support while applying online or on the phone.

You can also nominate someone to apply on your behalf. In this case, you will need to appoint your family member, friend or carer as your representative on My Aged Care.

If you are successful in your application, the contact centre operator will refer you for either a RAS or ACAT/S home support assessment.

If the operator determines that you are eligible for basic home support through the Commonwealth Home Support Programme (CHSP) you will be assessed by a Regional Assessment Service (RAS).

Otherwise, if the operator believes you require higher care support, a member of an Aged Care Assessment Team/Service (ACAT/S) will visit you at home to assess you for a Home Care Package (HCP) that will meet your needs.

When you first contact My Aged Care, the contact centre operator will assign you an aged care client number and will open a central client record. This record will eventually contain your information about your assessed needs and government-funded care services you have been found eligible for.

What will a face to face assessment be like?

Your in-person assessment will be a lot more comprehensive than your over the phone eligibility check.

Be open and transparent about your wishes and what you believe will be of assistance around the home.

Your ACAT/S assessor may recommend things you haven’t even thought of, which will be of benefit around the home.

If you require higher level care than what a Home Care Package can offer, they may assess you as needing entry into an aged care home.

Checklist for a face to face assessment

To prepare for your face to face assessment, make sure to have:

• Medicare card and a form of identification, for instance, Department of Veterans’ Affairs (DVA) card, driver’s license, passport, or healthcare card
• Notes or referrals from your doctor
• Ask a support person to be present for the assessment if you want
• Prepared questions and information about aged care that you wish to discuss with the assessor so you have a better understanding about services
• Contact details for your doctor and any other health professionals you see regularly
• Information on support you receive from others or from the community
• Have a translator or Auslan interpreter pre-organised if you require it

What to expect

You may need to fill out an Application for Care Form which will be provided by the assessor.

You can expect a conversation with the assessor asking you about your needs or any health problems.

They will ask you about any support you receive, your current lifestyle, any health concerns or chronic illnesses, how you deal with day to day tasks at home, if you struggling with any cognitive issues or memory loss, whether you have problems at home or with personal safety, any activities you engage in with family or in the community, and they will ask if they can chat with your doctor.

If you have a family member, friend or carer with you, the assessor may ask you for permission to talk to them about any support they believe you might benefit from.

What next?

If you are eligible for CHSP service, you should be told during your face-to-face assessment.

However, if you are eligible for a Home Care Package, any short-term care options or nursing homes, there will be a period of time where your assessor reviews the information you provided and determines what option best suits you.

They will provide a recommendation to a “decision maker,” who will then make the final decision on your case.

You will receive a letter within two weeks of your assessment to let you know if you have been found eligible for aged care services.

Source:
This article was originally published on https://www.agedcareguide.com.au/information/assessing-your-needs. Reproduced with permission of DPS Publishing.

Stay up to date with what’s happened in the Australian economy and markets over the past month.

Click here to view our update.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Wealth Advisers Pty Ltd (ABN 35 994 727 125) as a Corporate Authorised Representative (1316489) of Integrity Financial Planners Pty Ltd (AFSL 225051). Integrity One Wealth Advisers Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

About SMSF investment restrictions

SMSFs are complex, here we have outlined some of the restrictions to help you before you make any decisions on self-managed super fund (SMSF) investment. You must ensure you understand any restrictions on SMSF investments to avoid any penalties.

There are some exceptions, however, generally your SMSF must not:

• lend or provide financial assistance to members or related parties
• acquire assets from members or related parties
• use collectables and personal use assets in a way that provides a present-day benefit
• allow trust distributions owing to the SMSF to remain unpaid
• breach the in-house asset rules
• borrow money.

No one associated with your SMSF should get a present-day benefit from its investments.

If you don’t comply with the investment restrictions, the ATO may take a range of actions, including:

• imposing penalties
• making the fund non-complying
• disqualifying you as a trustee
• prosecution of trustees.

Who are related parties?

A related party of your SMSF includes:

• all members of your fund
• associates of fund members, which include
  • the relatives of each member
  • the business partners of each member
  • any spouse or child of those business partners
  • any company or trust the member or their associates control or influence
• standard employer-sponsors (employers who contribute to your SMSF for the benefit of a member under an arrangement between the employer and a trustee of your fund)
• associates of standard employer-sponsors, which include
  • business partners and companies or trusts the employer controls (either alone or with their other associates)
  • companies and trusts that control the employer
  • relatives of an employer sponsor.

A relative is any of the following:

• a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse
• a spouse of the member and any individual specified above.

Loans and financial assistance

Your SMSF can’t provide loans, or direct or indirect financial assistance, to a member or a member’s relative. For example, you can’t use your SMSF as guarantor for a loan for a member or a member’s relative.

Loans must:

• be in the best interests of the members
• comply with the SMSF’s investment strategy
• be conducted on a commercial arm’s length basis.

If you run a business through your SMSF, you also can’t overpay a member or relative of a member for their services. If you employ a member or a relative of a member, their salary or wage must not be higher than the standard salary for that type of role.

Acquiring assets

Your SMSF can’t acquire an asset from a related party unless the price reflects the market value and is:

• a listed security (for example, shares, units or bonds listed on an approved stock exchange)
• business real property
• an asset specifically excluded from being an in-house asset.

You must also ensure the market value of your fund’s in-house assets doesn’t exceed 5% of the total market value of your fund’s assets.

Crypto assets and private company shares are not listed securities and can’t be acquired from a related party.

If an asset is not acquired or sold at arm’s length, all or part of any income from the transaction may be non-arm’s length income and taxed at the highest marginal rate.

To help you comply with the requirements, use the valuation guidelines for self-managed super funds.

Collectables and personal use assets

Where your fund invests in collectables and personal use assets, this must be for genuine retirement purposes, not to provide any present-day benefit.

Assets such as artwork, boats, jewellery, vintage cars and wine are described as collectables and personal use assets.

Natural diamonds (including pink diamonds), when held in loose form, are not considered collectable or personal use assets. As such, they do not have specific storage and insurance requirements. However, for these types of assets it is recommended trustees:

• hold adequate insurance
• consider storage arrangements.

‘Diamonds held in loose form’ means they cannot be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.

Collectables and personal use assets can’t be:

• used by or leased to a related party (if leased to an unrelated party it must be at arm’s length)
• stored or displayed in the private residence of a related party (this includes all parts of the land the residence is situated on and all buildings on that land, such as garages or sheds)
• displayed in any other premises owned by a related party (they can be stored there provided they’re not visible to clients and employees).

You must keep a written record of the reason for deciding where to store the assets.

Collectables and personal use assets must be insured. You should consider the availability and cost of insurance before investing in them. Items must be insured within 7 days of the fund acquiring them and the fund must be listed as the owner and beneficiary of the policy.

These assets can be sold to related parties provided the sale is at market value as determined by a qualified, independent valuer.

Unpaid trust distributions

If your SMSF is entitled to a distribution from a related trust but you allow it to remain unpaid, you may contravene the:

• in-house asset rules
• arm’s length rule
• sole purpose test.

In-house assets

You are restricted from having in-house assets that comprise more than 5% of the market value of the SMSF’s total assets.

An in-house asset is any of the following:

• a loan to a related party of your fund
• an investment in a related party of your fund
• an asset of your fund that is leased to a related party, such as business equipment or machinery.

Any lease must be made on an arm’s length basis and reflect the market value.

If at the end of the financial year your SMSF’s in-house assets exceed 5%, you must prepare a written plan to reduce in-house assets to 5% or below. This plan must be prepared before the end of the following financial year. Trustees must also ensure the plan is carried out.

There are some exceptions to in-house assets, including:

• business real property that is leased between your fund and a related party of your fund
• some investments in related non-geared trusts or companies.

The in-house asset rules for assets owned before 11 August 1999 were defined differently. If your SMSF owns assets that were acquired before this date, you should review your fund’s investments to ensure you are complying with the current rules.

Decrease in asset values due to COVID-19

Some SMSFs may have experienced a decrease in asset values due to the economic impact of COVID-19. If this resulted in a breach of the in-house asset rules as at 30 June 2020, or the in-house assets being more than 5% of the total assets, the fund was required to prepare and implement a rectification plan by 30 June 2021.

Business real property

Business real property generally means land and buildings used wholly and exclusively in a business. It’s an exception to the in-house asset and related party acquisition rules.

If business real property contains a dwelling for private or domestic purposes such as a farm, it can still meet the requirements of being used wholly and exclusively in a business if:

• any dwelling used for private or domestic purposes is in an area of land no more than 2 hectares, and
• the main use of the whole property is not for domestic or private purposes.

Running a business in an SMSF

If running a business through an SMSF, it must be:

• allowed under the trust deed
• operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts.

You should get professional advice before running a business through your SMSF.

It is important to ensure the sole purpose test is not breached. Issues that attract our attention include those where:

• the trustee employs a family member (we look at things like the stated rationale for employing the family member and the salary or wages paid)
• the ‘business’ is an activity commonly performed as a hobby or pastime
• the business run by the fund has links to associated trading entities
• there are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.

Contact us if you have any questions regarding your SMSF, we’re here to help.

Source: ato.gov.au April 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-investing/restrictions-on-smsf-investments/what-are-the-smsf-investment-restrictions.

Spring. The season of new growth, longer days, and an explosion of “For Sale” signs popping up like daisies. It’s no secret this is the busiest time of year for real estate and it’s not just the weather that’s warming up. The property market is buzzing, with a greater range of homes to choose from, more buyers out there, and property values on the rise across much of Australia. 

But while spring brings plenty of opportunity, it can also get a little…frantic. The trick is to stay cool-headed in a hot market. Here’s how.

A season of opportunity

Spring is notorious for being the most active selling period of the year. That means you’ll likely have more properties to choose from, which is great news if you’ve been looking for a while or holding out for “the perfect home”. But it also means more buyers are emerging from hibernation. And this year, there are plenty of them. According to a recent report, 44% of Australians plan to buy a home in the next five years.

As we enter the first rate cutting cycle in years, buyers are approaching the market with greater confidence – and often with a pre-approval in hand. Pre-approval volumes are  up 30% on 2024 figures and 50% up from February 2023.

Translation? The spring market is competitive and if you’re not ready, you could easily find yourself left behind.

Sort your finances first

The first step (before you even start trawling listings or lining up inspections) is getting your finances sorted.

There’s nothing worse than falling in love with a property only to realise you’re not in a position to act quickly enough. So, it’s important to understand how much you can borrow, be clear on what your repayments might look like, and ideally also get a home loan pre-approval in place. Pre-approval gives you a concrete idea of your budget and shows sellers and agents that you’re serious. In a fast-paced market, that can make all the difference.

Do your research (it’s more fun than it sounds)

Buying a property is one part emotion and five parts research and that means doing your homework.

Get familiar with the suburbs you’re targeting. Check out recent sales in the area and compare asking prices. Understand the local amenities, schools, transport links, and development plans. If a home seems unusually cheap or too good to be true, there’s probably a reason.

And don’t just rely on glossy listings. Talk to agents, attend auctions (even if you’re not bidding), and keep track of how quickly properties are selling. The more time you spend understanding the market, the more confident you’ll be when it’s time to buy.

Don’t let the styling sway you

Spring is a clever time to sell. The flowers are blooming in the gardens; the sun is shining in the windows and vendor stylists know exactly how to make a home look like your future dream life. But as charming as a styled home might be, it’s important to look past the surface.

Staging is designed to help you picture yourself living there, but it can also distract from potential flaws. Ensure you look below the surface. Is the layout right for your lifestyle? Is there enough storage? What’s the condition of the roof, wiring, or plumbing?

And yes, the roses in the garden might be spectacular, but they’re not going to help with your morning commute.

Be fast, but don’t be rash

It’s a delicate balance: moving quickly without being rushed. In a spring market, hesitation can absolutely cost you, especially when the competition is high. But that doesn’t mean throwing caution to the wind or offering more than your budget allows just to ensure success.

If you’ve done the prep work (budget sorted, criteria defined and pre-approval secured) you’ll be ready to act swiftly when the right property comes up.

And if you miss out? Don’t panic. There’s always another property coming onto the market. Keep your strategy tight, your expectations grounded, and your eyes on the long game.

Whether you’re stepping into the market for the first time or moving into your next chapter, a little preparation can give you that spring in your step to make your property dreams come true.

If you have any questions or need any information please give us a call on 039723 0522.

The Australian Council of Trade Unions is pushing to limit negative gearing and capital gains tax discounts to just one investment property.

So who stands to win or lose the most if it happens? And is the Albanese government likely to act on the proposal, given Labor has been burnt on the issue before?

Research on Australian housing finance shows negative gearing and capital gains tax discounts were not designed with rental housing in mind – yet this is where they’ve had their greatest impact.

How do the tax breaks work now – and what might change?

Under current negative gearing rules, investors are able to deduct losses incurred from an investment property (such as interest payments and other expenses) against their own taxable income. These can be claimed on an unlimited number of investment properties.

High-income earners tend to have greater incomes to buy properties, and larger tax bills to make deductions against.

With the 50% capital gains tax discount, only half the increase in price of an asset is taxed when it is sold. High-income earners also tend to benefit more from this than low-income earners.

Under the ACTU’s proposal, the current negative gearing and capital gains tax discount arrangements would stay the same for the next five years.

That would give investors time to adjust their property portfolios before a change to only getting tax breaks on a single investment property.

ACTU Secretary Sally McManus put forward the idea at the national economic reform roundtable. She warns continuing to give investors tax discounts to own multiple properties is making home ownership “nearly unimaginable for young people”.

Who would win and lose under the proposal?

According to analysis of the most recent Australian Tax Office statistics from 2022-23 by RMIT researcher Liam Davies, there were 2,261,080 individuals with an “interest in property” – meaning they have an investment in at least one rental property.

Of those investors, 1,117,175 (49.4%) were negatively geared. And of those who were negatively geared, 810,875 have an interest in one property, and 306,300 have an interest in two or more properties.

1 in 7 property investors would be affected by the ACTU’s proposal

Source: ATO Taxation Statistics 2022-23, Table 27

So yes, there would be some losers under the ACTU proposal. About 306,300 out of 2,261,080 investors – 13.5%, or roughly one in seven property investors – would be affected by the new proposed limits. That’s just over 1% of all Australians.

But for the majority of other investors who negatively gear now – 810,875 people at last count – they would continue on with the same tax breaks as before.

What tax breaks cost now – and what they could fund

It’s also worth noting that negatively geared investors “lost” (or claimed deductions for) a total of A$10.4 billion in 2022-23, with $4.8 billion being “lost” by investors with an interest in two or more properties.

The ACTU estimates its change would raise about $1.5 billion in tax revenue each year.

That money could go towards housing in other areas – such as the government’s Housing Accord target of helping finance 40,000 social and affordable homes over the next five years.

We’ve known for years that a tiny fraction of investors actually get the vast majority of these tax breaks.

The Parliamentary Budget Office has reported around 80% of the benefits of the capital gains tax discount go to the top 10% of Australian income earners, while 60% of the benefits of negative gearing go to the top 20% of income earners.

Over the past decade, foregone revenue from negative gearing and capital gains taxation has totalled more than A$80 billion.

Tax breaks that were never meant to work this way

Neither negative gearing nor the capital gains tax discount were initially targeted at rental housing.

Negative gearing provisions actually date back to an unclear loophole in the 1936 Income Tax Assessment Act.

And until as recently the mid-1980s – just two generations ago – there was no capital gains taxation in Australia. Back then, it was much harder for investors to get finance to buy rental properties.

The big change came in 1999, when then-prime minister John Howard acted on a Treasury recommendation and applied a blanket 50% discount to all assets held for a year or more.

At the time, the stated aim was to get more people investing in Australian businesses, such as through the share market. Instead, many people ploughed money into housing and have bid up house prices ever since.

What are the prospects of change?

Within the past year, Labor has repeatedly ruled out changing negative gearing or the capital gains tax discount.

Labor has been cautious about it ever since Bill Shorten’s failed 2019 election campaign, which proposed limiting negative gearing to newly-built dwellings and reducing the capital gains tax discount from 50% to 25%.

But the simplicity of the ACTU’s proposal – and the fact that it would leave the majority of property investors untouched – may make it simpler to implement and also easier to win over voters.

The Greens have already said they back the ACTU’s proposal. So if the Albanese government chose to act, it would have enough support in parliament to pass it.

Public support for limits on how many properties investors can own has also grown in recent years. Gen Z and Millennial voters now comprise almost half the electorate – and their most pressing concern is housing (un)affordability.

Source: https://theconversation.com/how-many-of-australias-2-2-million-property-investors-would-lose-out-under-a-new-plan-to-curb-negative-gearing-262595