ATO Interpretative Decision

ATO ID 2003/997

Goods and Services Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a child care provider that is eligible to receive funding from the Commonwealth, making a GST-free supply under subdivision 38-D of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities?

Decision

Yes, the entity is making a GST-free supply under subdivision 38-D of the GST Act, when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities.

The supply of the extra activities is GST-free under section 38-155 of the GST Act and the supply of the outside school hours care and vacation care services is GST-free under section 38-150 of the GST Act.

Facts

The entity is an organisation registered for goods and services tax (GST) that provides outside school hours care and vacation care services.

The entity is operating a child care service that is eligible to receive funding from the Commonwealth under guidelines made by the Minister administering the Child Care Act 1972 and the family assistance law (within the meaning of section 3 of the A New Tax System (Family Assistance)(Administration) Act 1999 (Child Care Minister), that relate to the funding of outside school hours care and vacation care services.

The entity's outside school hours care service provides recreational programs and activities as well as time for rest and homework. The entity cares for primary school children before and/or after school and/or on 'pupil free' days.

The entity's vacation care service provides care and creative indoor and outdoor activities during the school holidays for primary school children. As part of its outside school hours care service and its vacation care service, the entity provides extra activities for the children, for example swimming as part of regularly scheduled 'activity days' and on an ad hoc basis. The entity charges an additional fee, for these extra activities, on top of the normal daily fee.

The entity does not offer the extra activities to any child who is not concurrently receiving outside school hours care or vacation care from the entity.

The entity operates in accordance with the child care licensing requirements of the State or Territory in which the child care is supplied.

Reasons for Decision

A supply of child care is GST-free under section 38-150 of the GST Act if it is a supply of child care by a supplier that is eligible for funding (whether or not in respect of that particular supply) from the Commonwealth under guidelines made by the Child Care Minister that relate to the funding of:

(a)

family day care, or

(b)

occasional care, or

(c)

outside school hours care, or

(d)

vacation care, or

(e)

any other type of care determined by writing by that Minister.

The entity is supplying outside school hours care and vacation care services and is eligible for funding from the Commonwealth under guidelines made by the Child Care Minister. Therefore, as the entity's supply of child care satisfies the requirements of section 38-150 of the GST Act, it is GST-free.

However, the entity also provides extra activities as part of regularly scheduled 'activity days' and on an ad hoc basis.

Section 38-155 of the GST Act states:

A supply is GST-free if it is a supply that is directly related to a supply of child care that is:

(a)

GST-free because of section 38-140, 38-145 or 38-150; and

(b)

supplied by, or on behalf of, the supplier of the child care.

The extra activities are directly related to a supply child care as they are offered as part of the entity's supply of the outside school hours care service and its vacation care service.

As the entity's supply of child care is GST-free under section 38-150 of the GST Act and the extra activities are directly related to that child care, the supply by, or on behalf of, the entity of the extra activities is GST-free under section 38-155 of the GST Act.

Accordingly, the entity is making a GST-free supply under subdivision 38-D of the GST Act, when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   subdivision 38-D
   section 38-150
   section 38-155

Keywords
Goods and services tax
GST free
GST child care
Other child care

Siebel/TDMS Reference Number:  1260112

Business Line:  Indirect Tax

Date of publication:  7 November 2003

ISSN: 1445-2782