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Abstract

It is claimed that the way to make large, tax-free profits is to develop a resident-funded retirement village. This claim is examined in respect of stata title developments and the various occupancy right based developments, in particular, the lease premium, the loan and the share premium methods. The author's examination reveals that all the occupancy right methods result in excessive assessments, as the entire in-going contribution is assessable and no deduction is available for development costs. Variations to these occupancy reight methods are examined, but they fail to overcome the threat imposed by Part IVa of the Income Tax Assessment Act 1936. On the other hand, only the actual development costs are assessed under the strata title method. On balance, the strata title development method gives the best tax result. The occupancy right methods do not live up to their claimed tax advantages.

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