ATO Interpretative Decision

ATO ID 2001/686

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 supplier of residential care, making a GST-free supply under section 38-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies government funded residential care services and accommodation to people with intellectual and physical disabilities?

Decision

Yes, the entity is making a GST-free supply under section 38-25 of the GST Act when it supplies government funded residential care services and accommodation to people with intellectual and physical disabilities.

Facts

The entity is a supplier of residential care. The entity is supplying care services and accommodation to people with intellectual and physical disabilities. The care recipients are charged a small fee for the care services and accommodation provided to them.

The care services supplied are daily living activities assistance, meals and refreshments, resident social activities, general laundry and cleaning services.

The entity receives funding from the federal government to supply the care services and accommodation to people with intellectual and physical disabilities. The accommodation is supplied in the course of making the supply of care services to the disabled persons. The entity is not subcontracted by the government to perform these services on behalf of the government. Rather, the entity provides the services directly to its physically and intellectually disabled clients.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Section 38-25 of the GST Act deals with supplies of residential care.

Under subsection 38-25(2) of the GST Act, a supply of services is GST-free if:

•

the services are provided to one or more aged or disabled people; and

•

the Aged Care Minister has determined in writing that the services are of a kind covered by Schedule 1 to the Quality of Care Principles; and

•

the supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply.

The entity is supplying care services to people with intellectual and physical disabilities. That is, the services are provided to one or more disabled people. Therefore, the first requirement of subsection 38-25(2) is satisfied.

In relation to the second requirement, the Aged Care Minister has made a written determination: GST-free Supply (Residential Care - Government-Funded Supplier) Determination 2000 (the Determination). Clause 4 of the Determination provides that all services specified in Schedule 1 to the Determination are of a kind covered by Schedule 1 to the Quality of Care Principles.

The care services that the entity is supplying are daily living activities assistance, meals and refreshments, resident social activities, general laundry and cleaning services. Daily living activities assistance is covered by item 2.1 in the table in Part 2 of Schedule 1 to the Determination. Meals and refreshments are covered by item 1.10 in the table in Part 1 of Schedule 1 to the Determination (Part 1). Resident social activities, general laundry and cleaning services are covered by items 1.11, 1.8 and 1.6 in Part 1 respectively.

Accordingly the second requirement of subsection 38-25(2) of the GST Act is satisfied.

As the entity receives funding from the government to supply the care services and accommodation to disabled persons, the third requirement of subsection 38-25(2) of the GST Act is also satisfied.

Furthermore, subsection 38-25(4) of the GST Act provides that a supply of accommodation is GST-free if it is made to a person in the course of making a supply of services to that person that is GST-free under subsection 38-25(2) of the GST Act.

The entity is making GST-free supplies to disabled persons under subsection 38-25(2) of the GST Act. In the course of making these supplies, the entity supplies accommodation to these same people. Therefore, the supply of the accommodation is GST-free under subsection 38-25(4) of the GST Act.

In summary, the entity is making GST-free supplies of residential care services and accommodation under subsection 38-25(2) of the GST Act and subsection 38-25(4) of the GST Act, respectively, to the care recipients for which it charges a small fee to the care recipients.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-25
   subsection 38-25(2)
   subsection 38-25(4)

Other References:
GST-free Supply (Residential Care - Government Funded Supplier) Determination 2000
clause 4
Schedule 1
Schedule 1 Part 1 table item 1.6
Schedule 1 Part 1 table item 1.8
Schedule 1 Part 1 table item 1.10
Schedule 1 Part 1 table item 1.11
Schedule 1 Part 2 table item 2.1

Keywords
Goods & services tax
GST free
GST health
Section 38-25 - residential care

Business Line:  GST

Date of publication:  30 November 2001

ISSN: 1445-2782