ATO Interpretative Decision
ATO ID 2001/580
Goods and Services Tax
GST and employees of retirement village operatorsFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a site administrator of a retirement village, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides various services to its employer, the retirement village operator?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides various services to its employer, the retirement village operator. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.
Facts
The entity is a site administrator of the retirement village. The entity provides various services, as an employee, to the retirement village operator (the operator).
The entity is an employee of the operator (ie the operator pays the entity's salary, is responsible for superannuation contributions and withholds Pay As You Go (PAYG) amounts from the entity's salary). The entity is not providing the services as an interposed entity or as agent of the operator.
The residents pay a monthly management fee directly to the operator. The operator uses a portion of these fees to pay the salary of the entity.
Reasons for Decision
One of the requirements for a supply to be taxable under section 9-5 of the GST Act, is that the supply must be made in the course or furtherance of an enterprise carried on by the supplier (paragraph 9-5(b) of the GST Act).
Section 9-20 of the GST Act deals with the meaning of the term 'enterprise'. Subsection 9-20(2) of the GST Act provides that an enterprise does not include an activity, or series of activities, done by an employee.
The entity is an employee of the retirement village operator. Therefore, any supply that the entity makes to the retirement village operator as an employee is not considered to be a supply in the course or furtherance of an enterprise carried on by the entity.
Accordingly, paragraph 9-5(b) of the GST Act is not satisfied and the entity is not making a taxable supply under section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.
Date of decision: 3 August 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
paragraph 9-5(b)
section 9-20
subsection 9-20(2)
Division 38
Division 40
Keywords
Goods & services tax
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 3 August 2001 | Original statement |
| 9 December 2005 | Archived |
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