Edited version of private ruling

Authorisation Number: 1011528026278

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Ruling

Subject: Goods and services tax (GST) treatment of labour hire services

Question 1

Are you making a taxable supply when you provide staff to private hospitals?

Answer

Yes, you are making a taxable supply when you provide staff to private hospitals.

Question 2

Are you making a taxable supply when you provide staff to General Practitioners Offices?

Answer

Yes, you are making a taxable supply when you provide staff to General Practitioners Offices.

Question 3

Are you making a taxable supply when you provide staff directly to private clients for in-home services such as nursing?

Answer

No, you are making a GST-free supply when you provide staff directly to private clients for in-home services where the supply is of an eligible health service, such as nursing, under subsection 38-10(1) of the GST Act. You may also be making GST-free supplies of community care services under subsection 38-30(3) of the GST-Act.

Relevant facts and circumstances

You are a labour hire company that provides staff to aged persons hostels and nursing homes and general practitioners offices.

You are registered for GST.

Your fee for your services currently includes GST irrespective of whether your clients charge GST.

You are expanding your services to provide healthcare staff such as cleaners, nurses and carers to other parties and seek advice on whether all your services are taxable or whether some may be GST-free.

You intend to supply staff to:

· Private Hospitals - Under this arrangement the client (hospital) manages the staff. You pay the staff and invoice the hospital for the total cost which includes your fees.

· General Practitioner's offices - Under this arrangement the client (Doctors practice) manages the staff. You pay the staff and invoice the practitioner for the total cost which includes your fees.

You contend that these are business to business transactions.

You also intend to supply staff (for example; nurses, personal care attendant, cleaners) direct to private clients (for example; the elderly, frail aged, disabled). These will be in-home services provided direct to end users.

Duties performed by a personal care assistant could include dressing, showering, cooking, shopping and general household duties. A nurse would only provide nursing services. Client needs/requirements dictate the length of the time your staff are present. For example; cleaning once a fortnight for four hours or nursing on a daily basis.

You invoice each client on a weekly basis. Staff, such as the nurses would be employed by you.

You currently do not receive any government subsidy or funding in relation to the provision of your services.

Currently, the one client that you provide in-home services to does not receive any funding or assistance to help pay for your services.

You advertise your services (for example; in the yellow pages). You have also approached organisations such as X, Y and Z and expect to get some work via those sources.

Reasons for decision

Under section 9-40 of the GST Act, you are liable to remit GST on any taxable supply that you make.

You make a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if:

· you make the supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, 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.

Based on the facts you have provided, the supplies that you make are: for consideration, made in the course of the enterprise you conduct, connected with Australia and you are registered for GST. None of the supplies you make would meet the requirements to be input taxed under Division 40 of the GST Act.

Therefore, we are left to determine the extent of any GST-free supplies that you make. Subsection 9-30(1) of the GST Act states that a supply is GST-free if it is GST-free under Division 38 or it is a supply of a right to receive a supply that would be GST-free.

Certain health related supplies are GST-free under various provisions within subdivision 38-B of the GST Act. Under those provisions (except for sections 38-45 and 38-47 dealing with particular supplies of goods and section 38-55 dealing with private health insurance and ambulance insurance), the supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. This outcome results from the specific wording in some health provisions, whilst in other provisions it is due to the nature of the services themselves. This means that a GST-free supply of a health service cannot be made to a business entity or a non-profit body.

Subsection 38-10(1) of the GST Act deals with various health services and provides:

Section 38-10 Other health services:

(1)  A supply is GST-free if:

(a) it is a service of a kind specified in the table in this subsection, or of a kind specified in the regulations; and

(b) the supplier is a recognised professional in relation to the supply of services of that kind; and

(c) the supply would generally be accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

A person is a 'recognised professional' if, as per section 195-1 of the GST Act:

(a) the service is supplied in a State or Territory in which the person has a permission or approval, or is registered, under a State law or a Territory law prohibiting the supply of services of that kind without such permission, approval or registration; or

(b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind; or

(c) in the case of services covered by item 3 in the table - the service is supplied by an accredited service provider within the meaning of section 4 of the Hearing Services Administration Act 1997.

The table in subsection 38-10(1) of the GST Act lists 21 health services for the purposes of paragraph 38-10(1)(a). Item 10 of the table lists 'Nursing'.

It is considered that registered nurses meet the requirements of a 'recognised professional' under section 195-1 of the GST Act. However, subsection 38-10(1) of the GST Act is directed at only making supplies GST-free which are necessary for the appropriate treatment of the recipient of the supply.

In your case the nurses are paid a wage by you and you assume responsibility for all normal employer obligations. You then contract with a client to provide a nurse. The client then uses the nurse as part of its business operations and pays you for this service.

Question 1

In the situation that you describe, the nurses are supplied to health care providers including private and public hospitals, nursing homes and aged care facilities. The supply of the nursing services is between you and the health care provider. The recipient of the supply is the health care provider. For this reason, the supply cannot be said to be necessary for the appropriate treatment of the recipient of the supply. It is not the health care providers being treated but rather the patients of the health care providers. Therefore, the supply of the nurses to both public and private hospitals, nursing homes and aged care facilities will be a taxable supply subject to GST.

Question 2

In relation to supplies made to general practitioners surgeries, dental clinics, commercial or industrial businesses and the like, the supply of nurses by you under the circumstances described will be the same as that for question 1. That is, the supply of the nurses to these entities/organisations will be a taxable supply.

Question 3

Where a registered nurse is provided to a private individual, for example, a disabled person who requires home nursing, the situation is different to that above. Where registered nurses provide services which are generally accepted within the nursing profession as being necessary for the appropriate treatment of the recipient of the supply, the supply of such services will be GST-free.

Where the staff supplied are not registered nurses, or one of the other health services listed in the table to subsection 38-10(1), they will not meet the requirements of being a recognised professional for the purposes of subsection 38-10(1) of the GST Act. Therefore, in your case, the services of staff who are not registered nurses will not be GST-free under subsection 38-10(1) of the GST Act.

However, the supply of care by unregistered staff provides (including those of cleaners and personal care assistants etc) may still be GST-free under section 38-30 of the GST Act which deals with supplies of community care.

Section 38-30 Community care etc. provides:

(1) A supply of community care is GST-free if community care subsidy is payable under Part 3-2 of the Aged Care Act 1997 to the supplier for the care.

(2) A supply of care is GST-free if the supplier receives funding under the Home and Community Care Act 1985 in connection with the supply.

(3) A supply of community care is GST-free if the supply is of services:

(a) that are provided to one or more aged or disabled people; and

(b) that 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.

(4) A supply of care is GST-free if:

(a) the supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply; and

(b) the supply of the care is of a kind determined in writing by the Aged Care Minister to be similar to a supply that is GST-free because of subsection (2).

As you are not currently receiving any funding from the Commonwealth, a State or a Territory only the services provided for under subsection 38-30(3) above may presently be relevant to you.

For your information item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles covers the following items:

2.1 Daily living activities

Personal assistance, including individual assistance attention, individual 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 (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 Excludes hairdressing.

Other sections of subdivision 38-B of the GST Act that provide for GST-free supplies of health services also require, amongst other things, that you are the recipient of various forms of government funding. As previously noted you are not currently receiving any Government funding or subsidies in relation to the services you provide.

While you will not currently be making GST-free supplies of any of these services we have provided applicable legislative references for your future reference;

· 38-25 Residential care etc. where, amongst other things, you are an approved supplier within the meaning of the Aged Care Act 1997 and you receive funding from the Commonwealth, state or territory in connection with the supply

· 38-35 Flexible care. A supply of flexible care is GST-free if flexible care subsidy is payable under part 3.3 of the Aged Care Act 1997 to the supplier for the care.

· 38-40 Specialist disability services. If the supplier receives funding under the Disability Services Act 1986 or under a complementary State or Territory law in respect of the services

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