Planning ahead and attention to detail in contractual documentation are essential for retirement village operators wanting clarity of what GST costs they are up for.
That was the key GST message at this week’s Retirement Villages Association finance forum focussing on construction and development. Another outstanding event incidentally run by the able team at the Retirement Villages Association: www.retirementvillages.org.nz.
There aren’t many businesses in New Zealand with more GST headaches than retirement village operators. They live in a complex GST world. Getting it wrong can be expensive not to mention extremely time-consuming.
When constructing a facility, retirement village operators cannot claim GST credits on some construction costs, can claim back all GST on some costs and have to claim a portion of GST on other costs provided they continue to monitor and adjust that portion annually.
Knowing what they can and can’t claim and what costs they have to monitor every year makes for better sleep. Those operators who include GST in their planning when budgeting, concluding contracts and setting up systems will have an easier time and more clarity over their financial position. This involves people throughout their organisation with an appreciation of the GST issues working together. The legal, finance, IT, procurement, sales and property teams need to be working together.
When all systems, processes and controls are set up to deliver a correct and consistent GST outcome life is a lot easier and less risky for a retirement village operator.