Goods and Services Tax Determination
Goods and services tax: what is the GST treatment of the administration levy paid by parents and carers to a Family Day Care Scheme and Child Care Benefits (CCB) paid to carers by a Family Day Care Scheme on behalf of parents?
Please note that the PDF version is the authorised version of this ruling.This document has changed over time. View its history.
FOI status:may be releasedFOI number: I 10221973
This document was published prior to 1 July 2010 and was a public ruling for the purposes of former section 37 of the Taxation Administration Act 1953 and former section 105-60 of Schedule 1 to the Taxation Administration Act 1953.
From 1 July 2010, this document is taken to be a public ruling under Division 358 of Schedule 1 to the Taxation Administration Act 1953.
A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.
If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.
|Date of effect|
|This Ruling will apply on and from 1 July 2000.|
1. A Family Day Care Program is a Commonwealth funded, community based child care service which offers professional and supervised care for children up to 12 years of age in the private homes of approved Family Day Care Carers.
3. A Family Day Care Scheme is a network of carers supported and organised by a central coordination unit . The unit: resources carers, arranges the placement of children, monitors the care provided and undertakes the necessary administrative responsibilities.
4. The central coordination unit is generally administered by one of several types of operators such as: a local government (i.e., councils), a church or community group or an incorporated entity in its own right. For example, the coordination unit for Family Day Care in South Australia is the State Government.
GST-free child care services
5. Child care services are GST-free under the legislation if the childcare supplier is a registered carer[F1] or an approved child care service[F2]. The terms 'registered carer' and 'approved child care service' are defined in section 3 of the A New Tax System (Family Assistance) (Administration) Act 1999. Paragraph (b) of the definition of an 'approved child care service' includes an approved family day care service.
6. A supply of child care will also be GST-free where the supplier of the child care is eligible for funding from the Commonwealth under guidelines made by the Child Care Minister that relate to the funding of family day care[F3].
- GST-free because of section 38-140, 38-145 or 38-150 of the GST Act as explained in paragraphs 5 and 6 of this Determination; and
- supplied by, or on behalf of, the supplier of the child care.
- toy library for Carers to utilise for the children in their care;
- handouts, newsletters and updates for both Carers and parents;
- processing of attendance sheets which record children in care; and
- calculation and administration of CCB entitlement for Carers.
9. The administration levy charged to the parents enables the Family Day Care Scheme to provide services that are directly related to the supply of GST-free child care. Therefore, the levy charged by the central coordination unit to the parents is consideration for a GST-free supply.
10. If the administration levy consists of a charge or charges that are not directly related to the supply of GST-free child care, then those components of the levy must be apportioned and are subject to GST[F4]. For example, if part of the levy represents a membership fee which entitles the parent to be a member of the Family Day Care Scheme that membership fee is taxable.
11. The administration levy charged to the Family Day Care Carers enables the administrator of the Family Day Care Scheme to provide services that are directly related to the supply of GST-free child care. This levy is also GST-free.
12. To the extent that the levy consists of charges for services, which are not directly related to the supply of GST-free child care, the levy will be taxable. For example if the levy consists of components relating to the registration or training of the carer those components of the levy are taxable.
Child Care Benefit (CCB)
13. A parent can receive the CCB as a lump sum at the end of the financial year from the Family Assistance Office or they can elect to receive the CCB through their child care service. Where the parent elects to have the CCB paid directly to their child care service, the payment of CCB reduces the fee charged to the parent for the child care service.
14. If the parent chooses to receive the CCB through their child care service, the carer is required to submit a timesheet to the coordination unit. The coordination unit then submits a request for payment to the relevant government department. The department processes the request and forwards the payment to the coordination unit who subsequently forwards the CCB payment directly to the carer.
15. The CCB is a payment for child care services and reduces the child care fees payable by the parent. The CCB payment is considered to be a co-payment for GST purposes, as the payment is made to the carer on behalf of an identifiable third party (i.e., parent or guardian) even though the parent or guardian does not make the payment of CCB. Accordingly, if the child care service supplied to the parent is GST-free[F5], the CCB payment will be consideration for a GST-free supply and the payment will not include a GST component.
Commissioner of Taxation
10 January 2001
Not previously issued in draft form.
goods & services tax
GST-free child care
A New Tax System (Family Assistance)(Administration) Act 1999 3