• Specific questions and answers

    The following questions explore what is within the concept of 'residential care' for the purposes of section 38-25. None of the questions and answers should be read in isolation, but rather as part of the whole of the information contained in this document.

    Care services supplied as part of residential care

    Question 1. Are supplies of residential care services to aged or disabled people in the following situations GST-free?

    Non-interpretative – straight application of the law

    (a) By a government funded supplier:

    The supply of residential care services to an aged or disabled person by a government funded supplier is GST-free where the requirements of subsection 38-25(1) or (2) are met.

    Subsection 38-25(1) provides that the supply of services covered by Schedule 1 to the quality of care principles is GST-free if it is provided through a residential care service (within the meaning of the Aged Care Act 1997) and the supplier is an approved provider (within the meaning of that Act). This will generally be the case where the supplier receives a residential care subsidy under Part 3-1 of the Aged Care Act 1997 for the supply of the services.

    Subsection 38-25(2) provides that the supply of services which are covered by Schedule 1 to the quality of care principles to an aged or disabled person is GST-free where the supplier receives funding from the Commonwealth, a State or a Territory in connection with that supply.

    (b) By a non-government funded supplier:

    The supply of residential care services to an aged or disabled person by a non-government funded supplier is GST-free under subsection 38-25(3) where:

    • the services are supplied in a residential setting,
    • the Aged Care Minister has determined in writing that the services are of a kind covered by Schedule 1 to the Quality of Care Principles, and
    • the services include, and are only provided to people who require, the services set out in
      • item 2.1 (daily living activities assistance) of part 2 of that Schedule (Item 2.1), or
      • item 3.8 (nursing services) of part 3 of that Schedule (Item 3.8).
       

    Note: Some supplies of disability supports by a non-government funded supplier to disabled persons who are participants in the National Disability Insurance Scheme may be GST-free under section 38-38. For more information on section 38-38, see Issue 2 in Part 12 below.

    GST-free Supply (Residential Care – Non-Government-Funded Supplier) Determination 2000 has been made by the Aged Care Minister for paragraph 38-25(3)(b) purposes. This determination duplicates the services listed in Schedule 1 of the Quality of Care Principles and provides that these services are of a kind covered by Schedule 1 to the Quality of Care Principles if supplied in the circumstances mentioned in the determination.

    The circumstances determined by the Aged Care Minister are:

    • the resident has a continuing need for the services mentioned in Item 2.1 or Item 3.8, and
    • the services are supplied, under a written agreement with the supplier, as a package made up of
      • the services mentioned in Item 2.1 or Item 3.8,
      • other services mentioned in Schedule 1 to the Quality of Care Principles that are needed by the resident, and
      • accommodation, and 
       
    • the charges for services and for accommodation are payable to the same entity.

    For a detailed discussion of subsection 38-25(3), refer to GSTR 2012/3External Link Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels

    Meals supplied as part of residential care

    Question 2. Are supplies of meals to aged or disabled people in the following situations GST-free?

    Non-interpretative – straight application of the law

    (a) By a government funded supplier:

    The supply of meals, including those provided as part of a special diet, to an aged or disabled person by a government funded supplier is GST-free where the requirements of subsection 38-25(1) or (2) are met.

    Under subsection 38-25(1), the supply of meals is GST-free if it is provided through a residential care service (within the meaning of the Aged Care Act 1997) and the supplier is an approved provider (within the meaning of that Act). This will generally be the case where the supplier receives a residential care subsidy under Part 3-1 of the Aged Care Act 1997 for the supply of the meals.

    Similarly, under subsection 38-25(2), the supply of meals to an aged or disabled person is GST-free where the supplier receives funding from the Commonwealth, a State or a Territory in connection with that supply.

    (b) By a non-government funded supplier:

    The supply of meals, including those provided as part of a special diet, to an aged or disabled person by a non-government funded supplier is GST-free under subsection 38-25(3) where:

    • the meals are supplied in a residential setting
    • the Aged Care Minister has determined in writing that the services are of a kind covered by Schedule 1 to the Quality of Care Principles, and
    • the aged or disabled person requires and is also provided with, the services set out in:
      • item 2.1 (daily living activities assistance) of Part 2 of that Schedule (Item 2.1), or
      • item 3.8 (nursing services) of Part 3 of that Schedule (Item 3.8).
       
    • Note: Some supplies of meals by a non-government funded supplier to disabled persons who are participants in the National Disability Insurance Scheme may be GST-free under section 38-38. For more information on section 38-38, see Issue 2 in Part 12 below. 

    GST-free Supply (Residential Care – Non-Government-Funded Supplier) Determination 2000 has been made by the Aged Care Minister for paragraph 38-25(3)(b) purposes. This determination duplicates exactly the services listed in Schedule 1 of the quality of care principles and provides that these services are of a kind covered by Schedule 1 to the quality of care principles if supplied in the circumstances mentioned in the determination. Meals are listed in Schedule 1 of the Quality of Care Principles.

    The circumstances determined by the Aged Care Minister are:

    • the resident has a continuing need for the services mentioned in Item 2.1 or Item 3.8, and
    • the services are supplied, under a written agreement with the supplier, as a package made up of
      • the services mentioned in Item 2.1 or Item 3.8
      • other services mentioned in Schedule 1 to the Quality of Care Principles that are needed by the resident, and
      • accommodation, and 
       
    • the charges for services and for accommodation are payable to the same entity.

    For a detailed discussion of subsection 38-25(3), refer to GSTR 2012/3External Link Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels.

    Respite care supplied as part of residential care

    Question 3. Are supplies of respite care services to aged or disabled people in the following situations GST-free?

    Non-interpretative – straight application of the law.

    (a) By a government funded supplier:

    For the purposes of the GST Act, 'residential care' includes respite care. Accordingly, the supply of services made under a respite care arrangement is GST-free where the requirements of subsection 38-25(1) or (2) are satisfied.

    For an explanation of the supply of services that is GST-free under subsection 38-25(1) or (2), refer to question 1(a) under the heading 'Care services supplied as part of Residential Care'.

    (b) By a non-government funded supplier:

    For the purposes of the GST Act, 'residential care' includes respite care. Accordingly, the supply of services made under a respite care arrangement is GST-free where the requirements of subsection 38-25(3) are satisfied.

    For an explanation of the supply of services that is GST-free under subsection 38-25(3), refer to question 1(b) under the heading 'Care services supplied as part of Residential Care'.

    Extra services supplied as part of residential care

    Question 4. Are supplies of services covered by an extra services fee within the meaning of Division 35 of the Aged Care Act 1997 GST-free?

    Non-interpretative – straight application of the law

    Under subsection 38-25(5) the supply of services covered by an extra services fee, within the meaning of Division 35 of the Aged Care Act 1997, are GST-free to the extent that the services are covered by Schedule 1 to the Quality of Care Principles.

    Independent living units

    Question 5. Are supplies of residential care services and accommodation to aged or disabled people in independent living units GST-free?

    Non-interpretative – straight application of the law

    Generally, independent living units are non-government funded premises for residents who are able to care for themselves, but who can also choose to contract for services such as meals, cleaning and laundry. As we are not dealing with the government funded sector, the residential care provisions that need to be considered are subsections 38-25(3) and (4).

    For a supply of care services to be GST-free under subsection 38-25(3), one of the requirements is that the services be provided to aged or disabled people in a 'residential setting'. Subsection 38-25(3A) provides that services provided to a resident of a retirement village are taken to be provided in a residential setting if:

    a. the resident is a resident of a serviced apartment in the retirement village, and

    b. there is a written agreement whereby the operator of the retirement village provides daily meals and heavy laundry services to all of the residents of the apartment.

    However, services are not taken to be provided in a residential setting if the Aged Care Minister has made a determination specifying the levels of care services that residents must require and the Aged Care Secretary has not made an assessment of the resident that the resident requires that level of care services.

    Further, for the supply of accommodation to be GST-free under subsection 38-25(4), it must be made to a person in the course of making a supply to that person that is GST-free under subsection 38-25(3).

    If the supply of the care services do not satisfy the GST-free requirements under subsection 38-25(3), the supply of the accommodation cannot be GST-free under subsection 38-25(4).

    Where a supply of care services and accommodation is not GST-free under subsections 38-25(3) and (4), the supply of the:

    • services will need to be considered under subsection 38-30(3), and
    • accommodation will need to be considered under sections 38-250 and 40-35.

    In addition, some supplies of disability supports to disabled persons who are participants in the National Disability Insurance Scheme may be GST-free under section 38-38. For more information on section 38-38, see Issue 2 in Part 12 below.

    For further explanation of subsections 38-25(3) and (4), refer to GSTR 2012/3External Link Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels. 

      Last modified: 18 Nov 2013QC 27139