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Authorisation Number: 1051251592672
Date of advice: 14 July 2017
Subject: GST and supply of disability services paid by a management entity
Are the supplies of disability support services provided to an individual and paid by a management entity who receives funding for the individual, GST-free supply?
The supplies of disability support services to an individual will be GST-free provided those services are listed under item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles. Please refer to the reasons for decision.
This ruling applies for the following periods:
The scheme commences on:
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You provide and facilitate the duty of care, recreation and support of individuals with disabilities and mental health needs.
You provide the following personal care:
● Showering/bathing/toilet routines and hygiene
● Brushing of teeth, washing of hair, pedicure and all areas of cleanliness.
● Cook and prepare meals hot and cold every day, hydration H2O, beverages at a proper diet and nutritional.
● Provide occupational health and safety in the home environment
● Wash all clothing and keep all items hygienically clean.
● If patient is up in the middle of the night, care will be provided.
You also provide the following physical activities, recreation, support and holidays:
● Visiting shopping centres
● Visiting holiday homes and parent’s homes in country town.
● Bike riding, swimming, music, dancing etc
● Walking – parks, beach and neighbourhood
● BBQ picnics
● Gardening and vegetable patch etc.
You do not receive any funds directly from the Government or their agents.
You have a shared management arrangement with a paying entity and this entity is responsible to manage the funds for the patient.
You have a written agreement with the parents of the patient to provide the disability support and services to the patient.
You issue invoices to the recipient of the supply (the patient) for the disability services provided and receive payments from the paying entity.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-30(3)
A New Tax System (Goods and Services Tax) Act 1999 section 195-1
Reasons for decision
A supplier makes a taxable supply when the requirements of section 9-5 of the A New tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied.
You make a taxable supply if you make the supply for consideration; and the supply is made in the course or furtherance of an enterprise that you carry on; and the supply is connected with the indirect tax zone; and you are registered or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
Your supply of disability support services meets the requirements of section 9-5 of the GST Act and it is not input taxed. However, it should be determined whether the supply of disability support services or any part of such a supply is GST-free.
Recipient of the supply
Section 195-1 of the GST Act defines recipient in relation to a supply to mean the entity to which the supply was made. Where there are only two parties to the supply of services (the entity that supplies disability support services and the patient), generally there is a single supply to which the GST Act applies and the recipient of the supply is the patient.
However, where there is a third party payer involved in a transaction there may be one or more supplies to which the GST Act applies and it is necessary to determine what is being supplied and to whom. For example, tripartite arrangements may result in a supply of professional services to a third party payer by an entity that supplies health services with a further supply of services to a patient.
Goods and Services Tax Ruling GSTR 2006/9 Supplies provides further guidance on multi-party arrangements. Paragraph 156 states:
156. In some fiduciary relationships it may be necessary for one party to give consent to the supply of a health service for another party. For example, a custodial parent gives consent for the medical treatment of a child. The Commissioner accepts in these circumstances that the other party, the child, is the recipient of the supply.
In this case, you have a written agreement with the parents of the patient to provide the disability support services to the patient. The paying entity is responsible for the management of the funds received for the patient and you have a shared management arrangement with the paying entity. You issue invoice to the patient for the services provided to them and paid by the paying entity.
Under this arrangement we consider that the recipient of the supply is the patient as you have a written agreement with the parents of the patient to provide the disability support services. You do not provide this service to the patient on the instruction of the paying entity.
Supplies of disability support services
You do not receive any funds from the Government or their agents for the provision of disability support services to the patient. As such, the supply of disability support services may be considered under subsection 38-30(3) of the GST Act.
Subsection 38-30(3) of the GST Act provides that a supply of home care is GST-free if the services:
(a) are provided to one or more aged or disabled people; and
(b) are of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles.
Each of these elements must be satisfied before a service will be a GST-free supply of 'Home care’ under subsection 38-30(3) of the GST Act.
As you are providing the disability support service to a disabled person, paragraph (a) of the subsection 38-30(3) of the GST Act is satisfied. The supply of services will only satisfy paragraph (b) of subsection 38-30 of the GST Act to the extent that the services are covered by item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles. These principles are listed as follows:
Personal assistance, including individual attention, supervision and physical assistance, with:
(a) bathing, showering, personal hygiene and grooming;
(b) maintaining continence or managing incontinence, and using aids and appliances designed to assist continence management.
(c) eating and eating aids, and using eating utensils and eating aids (including actual feeding if necessary)
(d) dressing, undressing, and using dressing aids;
(e) moving, walking, wheelchair use, and using devices and appliances designed to aid mobility, including the fitting of artificial limbs and other personal mobility aids;
(f) communication, including to address difficulties arising from impaired hearing, sight or speech, or lack of common language (including fitting sensory communication aids), and checking hearing aid batteries and cleaning spectacles.
This excludes hairdressing.
Where you provide any of the services listed above directly to the disabled person (the recipient of the supply), the supply of that service will be GST-free. It is important to note that it is only the supply of the individually listed services that are GST-free.
We note from the list of services provided by you that certain services are not included in the above list of services as per item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles. Therefore, the supply of those services not listed above will not be GST-free.
You are required to identify the services provided to the recipient of the supply based on the above list and treat them as GST-free and taxable supplies for GST purposes. This means any services that are not listed in the above list of services will be taxable and you are required to remit GST on those services.