• GST and residential care

    This information is for providers of residential care services to aged and disabled people.

    There are a number of ways in which residential care services can be GST-free and there are different requirements for each way.

    Health-related goods and services that don't meet the conditions for GST-free residential care may still be GST-free in other ways. For example, nursing services can also be GST-free as home care or other health services.

    Find out about:

    See also:

    Government funded residential care

    Your supply of residential care is GST-free if:

    • the services are listed under GST-free residential care services
    • it is provided through a residential care service (within the meaning of the Aged Care Act 1997), and
    • you are an approved provider (within the meaning of the Aged Care Act 1997).

    Your supply of residential care is also GST-free if:

    • you receive funding from the Commonwealth, a State or a Territory in connection with the supply
    • your services are provided to an aged or disabled person, and
    • the services are listed under GST-free residential care services.

    Fees that you charge to the resident for this care will be payment for a GST-free supply.

    See also:

    Non-government funded residential care

    If you provide non-government funded residential care, the criteria for your services to be GST-free differ according to whether your services are provided in:

    Other than a retirement village

    If you do not receive any funding directly from government for your supply of residential care services and you do not operate a retirement village, your services are GST-free if:

    • the services are provided to an aged or disabled person in a residential setting
    • the services are listed under GST-free residential care services
    • the services include, and the aged or disabled person has a continuing need for, one or more of the services set out in item 2.1 (daily living activities assistance) or item 3.8 (nursing services) listed under GST-free residential care services
    • the services are supplied, under a written agreement with you, as a package made up of accommodation and the services described in the previous two points, and
    • the charges for services and accommodation are payable to the same entity.

    Privately funded nursing homes and aged-care hostels that provide care to aged or disabled people are considered to be a residential setting if:

    • residents do not have a proprietary interest in the property
    • residents can be moved at the operator's discretion under certain circumstances
    • premises are marketed and made available to the public as a place for care and accommodation, rather than just accommodation
    • residents have limited rights compared to residents who lease or own their premises.

    Continuing need

    You need to establish that an aged or disabled person has a 'continuing need' for one or more of the services set out in item 2.1 (daily living activities assistance) or item 3.8 (nursing services). This can be evidenced by a report of an assessment of a resident's care requirements, conducted by:

    • a registered medical practitioner, registered nurse, registered physiotherapist or registered occupational therapist, or
    • more than one person, including at least one registered health professional.

    Retirement village

    If you do not receive any funding directly from government for your supply of residential care services and you operate a retirement village, your services are GST-free if:

    • the services are provided to an aged or disabled person in a residential setting – that is:
      • the person is a resident of a serviced apartment in the retirement village, and
      • there is a written agreement under which the operator of the retirement village provides daily meals and heavy laundry services to all residents of the apartment
       
    • the services are listed under GST-free residential care services
    • the services include, and the aged or disabled person has a continuing need for, one or more of the services set out in either item 2.1 (daily living activities assistance) or item 3.8 (nursing services) listed under GST-free residential care services

    Serviced apartment

    To be a serviced apartment, it is necessary that:

    • the apartment is designed to be occupied by aged residents who require either or both the services listed in item 2.1 (daily living activities assistance) or item 3.8 (nursing services) listed under GST-free residential care services
    • there is at least one responsible person continuously on call, and in reasonable proximity, to render emergency assistance to the residents of that serviced apartment
    • the apartment is part of a single complex of serviced apartments accessible by a common corridor, and
    • there is a communal dining facility in the retirement village available to residents of the serviced apartments.

    A detached house, row house, terrace house, town house or villa unit is not a serviced apartment.

    Daily meals

    Daily meals are meals of an adequate variety, quality and quantity that are served each day at times acceptable to residents and management. The requirement will be satisfied if you provide three meals per day plus morning tea, afternoon tea and supper. You will still meet this requirement if a resident is temporarily absent on a particular day and receives their meals elsewhere, or is unwell and advises you not to provide meals at a particular time.

    Written agreement

    The agreement between you and the resident for the provision of daily meals and heavy laundry services can take the form of a separate written agreement, or a specific provision in an accommodation agreement or residence contract. The agreement must obligate you to provide the daily meals and heavy laundry services to all of the residents in the serviced apartment. This requirement is satisfied if you appoint an external provider as your agent or as your subcontractor.

    See also:

    Accommodation and serviced apartments

    Accommodation is not listed under GST-free residential care services. However, accommodation is GST-free if it is supplied in the course of supplying GST-free residential care services. This means the accommodation must be:

    • integral to the supply of the care, and the resident is accommodated at the facility so they can receive the care services they require
    • supplied as a package made up of accommodation and the GST-free residential care services, with the charges payable to the same entity.

    Similarly, the lease, hire, licence or sale of a serviced apartment in a retirement village is GST-free if it is supplied in connection with the supply of GST-free residential care services. However, the serviced apartment and GST-free residential care services do not need to be supplied as a package and the charges do not have to be payable to the same entity.

    See also:

    • GST Act, Subsections 38-25(4) and (4A): Residential care etc.
    • GSTR 2012/3 : Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels

    Services that are not GST-free residential care

    If services are not listed under GST-free residential care services they are not GST-free residential care. This includes visitor meals.

    Other services that are specifically excluded from GST-free residential care services, are:

    • cleaning of clothing requiring dry cleaning or another special cleaning process
    • hairdressing
    • motorised wheelchairs and custom made aids – though these may still be GST-free medical aids or appliances
    • intensive, long-term rehabilitation services required following, for example, serious illness or injury, surgery or trauma – though these may still be GST-free health services.

    There are a number of other ways that health-related goods and services can be GST-free. Use the tables below to find out if your supply is GST-free.

    Table A: If you don’t receive government funding

    Type of supply

    Check if the supply is GST-free in

    Medical services

     

    Other health services

     

    Hospital treatment

    • Section 38-20 of the GST Act
    • GSTD 2012/4 Goods and services tax: What is 'hospital treatment' for the purposes of section 38-20 of the A New Tax System (Goods and Services Tax) Act 1999?
     

    Non-government funded home care

    Subsection 38-30(3) of the GST Act

    NDIS disability support supplies

     

    Medical aids and appliances

     
    Table B: If you receive government funding

    Type of supply

    Check if the supply is GST-free in

    Other government-funded health services

    Section 38-15 of the GST Act

    Home care by government-funded suppliers

    Subsections 38-30(1), (2) and (4) of the GST Act

    Services for which a flexible care subsidy is payable to the supplier under the Aged Care Act 1997

    Section 38-35 of the GST Act

    Services for which the supplier receives funding under the Disability Services Act 1986 or under a complementary State law or Territory law

    Section 38-40 of the GST Act

    Supplies with taxable and GST-free components

    If you make supplies that have both GST-free and taxable components, you need to apportion the payment between the component that is GST-free and the component that is taxable, and pay GST on the taxable component.

    Components that are merely incidental to a main supply can be ignored for GST purposes, with the GST status being determined by the main supply.

    See also:

    • GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts

    Subcontracted services and services to specific entities

    Residential care services are generally only GST-free where the contractual recipient of the supply is an individual who receives the services.

    If you are contracting with another entity to deliver residential care services on behalf of that other entity, your supply to that entity is generally not GST-free.

    However, your supply to that other entity is GST-free, to the extent that your underlying service to the resident is GST-free, where the supply is made to:

    • an insurer settling a claim under an insurance policy
    • an operator of a statutory compensation scheme
    • an operator of a compulsory third party scheme, or
    • an Australian government agency.

    You can agree with the other entity not to treat the supply as GST-free.

    See also:

    • GST Act Section 38-60: Third party procured GST-free health supplies
      Last modified: 30 Jun 2017QC 52757