Payment of capital fund contributions deducted from exit entitlement
28 Payment of capital fund contributions deducted from exit entitlement
If an amount is deducted from an exit entitlement as a contribution to a capital fund, the operator of the retirement village must pay that amount into the relevant fund or account—
within
10 business days after making the deduction; or
if subsection (2) applies—in accordance with subsection (2).
Maximum penalty: $5 000.
Expiation fee: $315.
If an exit entitlement is paid to a resident in accordance with section 27(2)(b), the operator may, instead of paying an amount deducted from it into a fund or account within 10 business days (in accordance with subsection (1)(a)), pay the amount into the relevant fund or account—
if the operator determines that the residence will not be subject to another residence contract—at any time before the end of the financial year in which the exit entitlement was paid; or
in any other case—at any time before another person enters into occupation of the residence, provided that the operator must keep a record of the outstanding payments, and identify them in any relevant financial statements prepared for the purposes of this Act (while those payments remain outstanding).
If any amounts are deducted from an exit entitlement as contributions to 1 or more capital funds, the total amount that is deducted must not exceed—
in relation to an amount deducted under a residence contract entered into before the commencement of this subsection—an amount that is 12.5% of the current market value of the residence to which the exit entitlement relates; or
in relation to an amount deducted under a residence contract entered into after the commencement of this subsection—the lesser of the following amounts:
an amount that is 1% of the current market value of the residence to which the exit entitlement relates multiplied by the number of years (including any part year) of occupation of the residence under the residence contract;
an amount that is 12.5% of the current market value of the residence to which the exit entitlement relates.
Note—
This subsection provides a cap on the deductions. If the residence contract provides for some lesser amount as the deduction, then this subsection will not apply.
If an operator deducts an amount from an exit entitlement in contravention of subsection (3) the operator is guilty of an offence.
Maximum penalty: $ 35 000.
For the purposes of subsection (3), the current market value of a residence to which an exit entitlement relates is—
if the right to reside in the retirement village has been sold—the amount paid by the new purchaser as an ingoing contribution; or
in any other case—calculated in the manner provided in the residence contract but as if the consideration paid on sale of the right to reside in the retirement village was the current market value of that right.
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