GST-free supplies under section 38-38
For some types of supplies to participants, you may not receive any government funding as the NDIS funding is for the participants. If so, the GST-free sections in the GST Act that rely on you receiving government funding won't apply. To ensure certain supplies you make to a participant are GST-free, the GST Act has been amended to introduce section 38-38.
Some participants may choose to have the National Disability Insurance Agency (NDIA) administer the funding on their behalf. If you supply disability supports to a participant and claim payments for the supports through the NDIA Provider Portal, the NDIA is paying you on behalf of the participants. You are not receiving government funding for the supplies you make to the participant, and the participant (not the NDIA) is the recipient of the supply of disability supports you make.
From 1 July 2013, the following conditions must be met for a supply to a participant to be GST-free under section 38-38. The supply must be:
Supplies that may be GST-free include:
- sales of equipment
- hiring of equipment
Plan is in effect
For the supply to be GST-free, the participant's plan must be in effect under section 37 of the National Disability Insurance Scheme Act 2013 (NDIS Act), which means it must be approved by the NDIA.
The plan ceases to be effective when it is replaced by another plan, or when the participant ceases to be a participant of the NDIS.
Reasonable and necessary supports
For the supply to be GST-free, the supply must be of one or more reasonable and necessary supports. A participant's plan will contain a statement of supports and will identify those that are approved as reasonable and necessary.
Where the participant’s plan specifies an amount (such as time or quantity) of reasonable and necessary supports, any supplies of supports in excess of the specified amount of supports will not be GST-free under section 38-38. However, supplies may be GST-free under other provisions (see GST status of your disability support supplies for further information).
Made under a written agreement
For the supply to be GST-free, it must be made under a written agreement between you, the supplier, and the participant (or another person).
The written agreement must identify the participant and state that the supply is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of the NDIS Act, in the participant’s NDIS plan.
The written agreement can be between you and a person other than the participant. Other people can include those who manage the plan and funding for the participant. This would include the NDIA, a plan management provider registered with NDIA, or someone like a guardian or relative of the participant.
The written agreement may be a single document or a combination of documents, such as letters between you and the other party, and receipts or invoices you issue. It may include documents in electronic form.
As long as you have written evidence of a legally binding obligation for you to make the supply to the participant as specified in the plan, the requirement for a written agreement is satisfied.
Example 1: Supply made under a written agreement in accordance with a self-managed participant's plan
Joe, a participant, requires five hours of support on a weekly basis that is specified as a reasonable and necessary support in his plan. He requests XYZ Co (XYZ) to supply him with the support for a period of three months based on the NDIS published price. Joe provides XYZ with a letter identifying:
- that he is a participant, and
- the type of support he is to be provided with (as specified in his plan).
XYZ writes to Joe to confirm its agreement to provide the support, including the start date, and signs the letter. For the next three months, XYZ supplies Joe with the requested supports. These supplies are made under a written agreement that identifies Joe and states that the supplies are a reasonable and necessary support specified in Joe's plan.
If all the other requirements of section 38-38 of the GST Act are met, the supplies that XYZ makes to Joe as specified in Joe’s plan are GST-free.
Example 2: Supply made under a written agreement in accordance with a participant’s plan managed by a plan management provider registered with the NDIA
ABB Co (ABB) is registered with the NDIA as a plan management provider. A number of participants have engaged ABB to manage their plans for them.
Thanh, a participant, would like Elite, a provider of disability supports, to deliver one of the reasonable and necessary supports in her plan. With Thanh's consent, ABB emails Elite with Thanh's relevant requirements, including her name and the number of hours of support needed as specified in her plan. Elite writes to Thanh and ABB setting out the details of the support to be provided and the price to be paid, but makes no reference to Thanh's plan. ABB replies in writing to confirm Thanh's agreement to receive the supports from Elite.
The written agreement requirement is satisfied by the written evidence provided by the combination of ABB’s email setting out the supports required in accordance with the reasonable and necessary supports specified in the participant’s plan, Elite’s letter confirming support arrangements and ABB's letter of acceptance.
If all the other requirements of section 38-38 of the GST Act are met, the supplies Elite makes to Thanh in accordance with her plans are GST-free.
Note: Neither Elite's letter nor ABB's letter of acceptance, nor both together would be sufficient evidence of the written agreement. This is because these documents do not state that the supply is of a reasonable and necessary support as specified in Thanh's plan. ABB’s email on its own is also not sufficient evidence of the written agreement because it does not evidence a binding obligation on Elite to make the supplies to Thanh.
End of example
Supplies determined in a legislative instrument
For the supply to be GST-free, your supply to the participant must be of a kind specified in a legislative instrument made by the Disability Services Minister.
The legislative instrument applies to supplies made on or after 1 July 2013 but before 1 July 2017.