Rating exemptions and retirement villages

The Owners of Kingsley Retirement Village Strata Plan 12484 & 12951 and City of Joondalup [2018] WASAT 26.

In the case of The Owners of Kingsley Retirement Village Strata Plan 12484 & 12951 and City of Joondalup [2018] WASAT 26 the State Administrative Tribunal considered whether land used as a retirement village was being used exclusively for a charitable purpose and the retirement village could take advantage of the rating exemptions available under the Local Government Act¹ (LG Act).

Background

This matter concerns rates levied by the City of Joondalup (City) for the year ending 30 June 2017 in respect of 64 strata lots located in Kingsley and known as the Kingsley Retirement Village (Retirement Village).

The Retirement Village was developed by Westside Retirement Communities Pty Ltd as trustee for the Westside Retirement Communities Number 1 Unit Trust (Westside) in or about 1984 and comprises two separate strata schemes on Strata Plan 12484 (Lots 1 to 34) and Strata Plan 12951 (Lots 1 to 30) (Strata Schemes).

The Retirement Village is self managed by a village council elected by the owners of the strata lots within the Strata Schemes.

Save for Lot 34 which is owned by Westside and used as a village centre for the benefit of the residents of the Retirement Village (Lot 34), each of the 64 strata lots is privately owned by the relevant member of the Retirement Village and managed by a separate entity trading as Kingsley Retirement Village which comprises the two strata companies for the Strata Schemes (The Owners of the Kingsley Retirement Village Strata Plan 12484 and 12951 (Applicants)).

Under the LG Act, all land within a district is rateable land unless one of the exemptions set out in section 6.26 of the LG Act applies.

Section 6.26(2)(g) provides that land used exclusively for charitable purposes is not rateable land.

The Applicants had made several requests to the City seeking an exemption from paying rates on the basis that the Retirement Village is used for charitable purposes, specifically the relief of the aged.

The City disallowed the Applicants’ requests and the Applicants applied to the State Administrative Tribunal (SAT) to determine whether each of the 64 strata lots the subject of the Strata Schemes were used for charitable purposes and therefore not rateable land under the LG Act.

Decision

The only issue for determination by the SAT was whether any of the 64 strata lots in the Strata Schemes were exempt from rates on the basis that they were used exclusively for a charitable purpose.

The phrase ‘charitable purpose’ is not defined in the LG Act however it is well accepted, and was not disputed by the parties, that relief of the aged is a charitable purpose.²

In considering whether the land was used for a charitable purpose, the SAT considered precisely how the land was used during the relevant rating year such as the facilities provided and the benefits flowing to aged persons as well as the circumstances surrounding the use of the land such as the objectives and nature of the landowners and whether the Retirement Village was operated on a not for profit basis.³

The SAT found that whilst the Strata Schemes operated as a retirement village, the strata lots were not used for a charitable purpose as:

• each of the strata lots in the Retirement Village was made up of separately owned strata lots;
• each of the strata lot owners (except Lot 34), being persons aged 60 or older, used their property for their own private purposes. That is, they occupied the property as a private residence for their own accommodation needs; and
• providing a residence for one’s own personal accommodation was not using the land for a ‘charitable purpose’.

Ms R Petrucci, the presiding SAT member, contrasted this with cases where the SAT had found that land was used for a charitable purpose, namely where the relevant landowner:

• was a not for profit entity with charitable objects;
• operated a retirement village on the land where it provided accommodation and other services to aged persons within the community; and
• applied any income received by the organisation to the promotion of its charitable objects.⁴

The SAT also found that whilst Lot 34 was made available by Westside for use by all residents of the Retirement Village, Westside was a commercial entity operating to make a profit which is distributed to the members of the Westside Retirement Communities Number 1 Unit Trust and there was no evidence to show that those members have objects charitable in nature.

Lavan comment

This recent SAT decision is a good reminder of the factors that the SAT considers in determining whether land is exempt from rates on the basis that it is used exclusively for a charitable purpose in the relevant rating year.

It is not sufficient that a retirement village operates on the land or that the land is owned by a charitable institution or even used for the purposes of the institution.

Rather, section 6.26(2)(g) of the LG Act requires the land to be used exclusively for a charitable purpose and the SAT will primarily have regard to how the occupants actually use the land in conjunction with the circumstances surrounding the use of the land.

If you own land upon which a retirement village operates or operate a retirement village and are unsure whether you may meet the requirements for rating exemptions under the LG Act please contact us.