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Retirees Face GST Uncertainty
National Nice News
Australia
August 12, 2004
Self-funded retirees living in retirement villages may be slugged with the Federal Government's goods and services tax in a move which threatens to push many into overcrowded government-run facilities.
The move, which will backdate the GST to July 1 for services such as washing, cleaning and support, threatens to blow out retiree savings and push them into government aged-care homes, which will remain GST-free, according to retiree lobby groups.
Residents of the Minkara Retirement Resort in Sydney's northern suburbs say the tax will hurt them financially.
"[It's] an extra worry at this time of life," said one resident. "It will certainly curtail our spending," said another. The GST is estimated to hit retirees at the rate of between $80 to $100 per month.
The then minister for aged care, Senator Bronwyn Bishop, is recorded saying "When you are in a residential facility, you are in a facility which is GST-free" in Question Time on June 2, 1999.
Uncertainty over this current ruling, still in its draft form with the Australian Tax Office, is an example of the government hiding its "true" policies from voters on the eve of the election, says Shadow Treasurer Simon Crean.
"They'll sit on it and they'll wait until after the election, and they'll slug people," he told National Nine News. "The government's hiding the detail of the information."
Peak aged care lobby group FKP Australian Retirement Homes has spearheaded the campaign for certainty on the ruling, which is yet to come despite the ATO's own deadline passing with no mention, only a statement which said "due to the complexity of the issues covered, the draft rulings are not yet ready for release."
Charles McDonald, from the Retirement Villages Association says the slug is a cruel blow to its many cash-strapped members.
"Many of those residents came into those serviced apartments probably aged 80," he said. "They have been retired for 15 years and most of them can't afford it."
Aged-care facilities are already backdating and collecting the GST to avoid penalties if ruling becomes law.
"For many retirees this tax has already slipped through," Mr McDonald says. Should this continue, government-run GST-free aged care facilities will face even greater pressure.
"A resident may be forced with the decision to sell up and move into a government-funded hostel, which is crazy," he warns. "The public has to pick up that cost."
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