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  • Supplies with taxable and GST-free components

    If you make supplies with separately identifiable GST-free and taxable components, you must identify the component that is GST-free and the component that is taxable, with GST payable on the taxable component.

    Example – Separately identifiable GST-free and taxable components

    Happy Home Help is engaged by Brett, a disabled person, to provide a range of care services for two hours at a total cost of $60 plus any GST. Happy Home Help also charges an administration fee of $10 plus any GST.

    Happy Home Help is registered for GST and does not receive a home care subsidy for providing the care nor do they receive any other government funding for the care.

    Happy Home Help provides Brett assistance with bathing, personal hygiene and also provide house cleaning services. The bathing and personal hygiene services take one hour and the house cleaning services take one hour.

    The care services of bathing and personal hygiene are GST-free non-government funded home care. The house cleaning is not GST-free non-government funded home care.

    Happy Home Help would have to apportion the fee charged and account for GST for the house cleaning services. They may do a time-based apportionment, which would result in $30 being for house cleaning services with $3 being added for GST. The remaining $30 would be for GST-free non-government funded home care.

    The administration fee is not considered to be for a separate supply of services but instead forms part of the fees charged for the home care services.

    The administration fee relates to both the taxable and GST-free services. Happy Help would have to apportion the administration fee and account for GST for the administration services component that relates to the house cleaning services. They may do a time-based apportionment which would result in $5 being for house cleaning services with $0.50 being added for GST. The remaining $5 would relate to GST-free non-government funded home care.

    End of example

    Components that are merely incidental to a main supply are treated as part of the main supply, with the GST status being determined by the main supply. Whether a component is merely incidental is a question of fact and degree, and you need to adopt a common sense approach.

    Example – Merely incidental component

    Five Star Homecare Pty Ltd is engaged by Albert to provide a range of care services for four hours at a cost of $30 per hour plus any GST.

    Five Star Homecare is registered for GST and does not receive a home care subsidy for providing the care nor do they receive any other government funding for the care.

    Five Star Homecare's employee, Sari, provides Albert assistance with bathing, personal hygiene, managing incontinence and with his mobility. While Sari is delivering these services, she also assists Albert by mopping the bathroom floor to prevent falls after assisting Albert with bathing. This additional work takes 10 minutes and is not part of the services Five Star Homecare was contracted for. There is no separate charge for assisting with the additional work.

    The care services of bathing, personal hygiene, managing incontinence and assistance with mobility are GST-free non-government funded home care. The assistance with housework is not GST-free non-government funded home care.

    Ordinarily, Five Star Homecare would have to apportion the fee charged and account for GST for the time assisting Albert with the additional work. A time-based apportionment would result in $5 being for housework with $0.50 being added for GST.

    However, in the circumstances, the time spent assisting Albert with the additional work is merely incidental given the total time spent on the additional work compared to the total time that care is being provided.

    In this instance, Five Star Homecare can treat the entire supply as GST-free.

    End of example

    See also:

    • GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts
      Last modified: 05 Jun 2018QC 55890