Edited version of private ruling

Authorisation Number: 1011581707041

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Ruling

Subject: GST and supply of disability support services

Question 1

Is the supply of disability support services by an Australian entity (you) to a client (client A) a taxable supply?

Advice/Answers

Yes, the supply of disability support services you provide to client A is a taxable supply.

Question 2

Is the supply of disability support services by an Australian entity (you) under an agreement with a business entity (BE) to provide services to their client (client B), a taxable supply?

Advice/Answers

Yes, your supply of disability support services under an agreement with BE to client B is a taxable supply.

This ruling applies for the following period

N/A

The scheme commenced on

N/A

Relevant facts

You are carrying on an enterprise in Australia and are registered for GST purposes.

You provide disability support services to a range of clients.

Some of your clients receive funding under the Disability Services Act 1986.

Some of your clients are self-funded, and personally cover the full cost of support services, often from funds awarded through an insurance settlement. It is these clients to which your queries relate.

You stated in your ruling request that your supply of disability services, should be considered under section 38-10 of the GST Act as a supply of social work. You are not a member of a professional association that has uniform national registration requirements in relation to the supply of social work services.

You have requested specific advice on two separate supplies of disability services where the services are not funded by a Government entity. You have asked us to clarify the treatment of GST in relation to these transactions. Scenario 1 is outlined below and will be addressed in our advice as Issue 1, Question 1.

Scenario 1

You have supplied a copy of your agreement with the client A's family representative to provide community based rehabilitation and lifestyle support services for client A. For the purpose of this ruling we will refer to this as a supply of disability support services.

Your services involve the supervision, training and employment of support workers and other administrative duties in relation to the care of client A.

Your services do not involve daily personal care duties, for example, assistance with bathing, dressing, eating and mobility needs of client A. You supervise the provision of these personal care duties but do not directly provide these services as part of your supply.

Client A's family representative is not registered for GST and does not have an ABN.

You do not receive any government funding for this care under the Disability Services Act 1986 or any other act.

Client A's family representative pays you directly for your services.

Scenario 2 is outlined below and will be addressed in our advice as Issue 1, Question 2.

Scenario 2

You have supplied a copy of your agreement with BE to provide support services to their client, (client B). For the purpose of this ruling we will refer to this as a supply of disability support services.

Your services involve the supervision, training and employment of support workers and other administrative duties in relation to the care of client B.

Your services do not involve daily personal care duties, for example, assistance with bathing, dressing, eating and mobility needs of client B. You supervise the provision of these personal care duties but do not directly provide these services as part of your supply.

Client B has a disability and is unable to manage their own finances. Accordingly BE is the administrator of the financial affairs of client B and pays you directly for these services on behalf of client B.

You do not receive any government funding for this care under the Disability Services Act 1986 or any other act.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 38-10

A New Tax System (Goods and Services Tax) Act 1999 section 38-30(3)

A New Tax System (Goods and Services Tax) Act 1999 section 38-40

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decisions

Issue 1

Question 1

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. Section 9-5 of the GST Act states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) 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.

(* denotes a term defined in section 195-1 of the GST Act)

Your supply of disability support services meets the requirements of paragraphs 9-5(a) of the GST Act to 9-5(d) of the GST Act for the following reasons:

· your supply of disability support services is for consideration

· the supply is in the course or furtherance of your enterprise

· the supply is connected with Australia as you make the supply through an enterprise that you carry on in Australia and

· you are registered for GST.

The supply of disability support services is not input taxed. Therefore, what is left to determine is whether the supply of disability support services or any part of such a supply in the circumstances described 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 the health service 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 treatment services to a patient.

Goods and Services Tax Ruling GSTR 2006/9: Supplies (GSTR 2006/9) provides further guidance on multi party arrangements. Paragraph 156 of the GSTR 2006/9 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.

The agreement names client A's family representative as the other party with which you are making this agreement. Client A's family representative is responsible for payment for the supply of your services. The terms of the agreement state that you will provide support services for the care of client A, who is not capable of managing their affairs. We consider this supply is for the benefit of client A and as a family member, client A's family representative is acting on behalf of the recipient of the supply.

Supply of Health Services - Social Work

You have stated in your ruling request that your supply of disability support services, should be considered under section 38-10 of the GST Act. Subsection 38-10(1) of the GST Act provides that a supply of a health service, other than a medical service, is GST-free if:

(a) it is a service of a kind specified in the table in subsection 38-10(1) of the GST Act; 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.

For the purposes of paragraph 38-10(1)(a) of the GST Act, the service must be of a kind specified in the table in the subsection. Social work services are listed at item 21 of the table contained in subsection 38-10(1) of the GST Act.

For the purposes of paragraph 38-10(1)(b) of the GST Act, a recognised professional must provide the service. The term 'recognised professional' is defined in section 195-1 of the GST Act. In relation to the supply of social work, a person is a recognised professional if that person is a member of a professional association that has uniform national registration requirements relating to the supply of social work services.

Your entity is not registered as an entity providing social work services with a national body, thus you are not a recognised professional in relation to the supply of social work. The requirement in paragraph 38-10(1)(b) of the GST Act is not satisfied.

Therefore, your supply of disability support services is not a supply of a GST-free health service as the supply does not meet the requirements of subsection 38-10(1) of the GST Act. The supply is a taxable supply.

Supplies of community care

You have stated that your client lives in their own residence and that you do not receive any government funding for the provision of your disability support services to this client. As such, subsection 38-30(3) of the GST Act may apply in your case.

Subsection 38-30(3) of the GST Act provides that a supply of community 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 'community care' under subsection 38-30(3) of the GST Act.

Section 195-1 of the GST Act defines 'community care' as having the meaning given by section 45-3 of the Aged Care Act 1997 (ACA). Subsection 45-3(1) of the ACA provides that 'community care' is care consisting of a package of personal care services and other personal assistance provided to a person who is not being provided with residential care.

As you are providing these services to a disabled person paragraph (a) of subsection 38-30(3) of the GST Act is satisfied. Your supply will only satisfy paragraph (b) of subsection 38-30(3) of the GST Act to the extent that your services are covered by item 2.1 of Part 2 of Schedule 1 to the Quality of care Principles (Item 2.1). These principles are listed as follows:

Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles:

Personal assistance, including individual attention, supervision and physical assistance, with:

· bathing, showering, personal hygiene and grooming

· 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)

· dressing and undressing and using dressing aids

· moving, walking, wheelchair use and using devices and appliances designed to aid mobility, including fitting of artificial limbs and other personal mobility aids, and

· communication, including to address difficulties arising from impaired hearing, sight or speech or lack of common language (including fixing sensory communication aids) and checking hearing aid batteries and cleaning spectacles.

This excludes hairdressing.

Services that are not covered by Item 2.1 include

· assistance with housework

· assistance with gardening

· meal preparation services

· grocery shopping for individuals

· monitoring medication

· rehabilitation services

· assistance with writing cheques, letters, etc

· advocacy services

· provision of social and community activities, such as providing companionship, craft and reading activities to individuals, and

· driving individuals to and from appointments.

You have advised that your supply of disability services consists of the supervision, training and employment of support workers and other administrative duties in relation to the care of client A.

Your services do not involve daily personal care related services of the kind listed in Item 2.1. You supervise the provision of these types of personal care services but are not directly involved in providing these services as part of your supply.

As you are not providing services of a kind covered by Item 2.1 your supply does not satisfy subsection 38-30(3) of the GST Act. Therefore you are making a taxable supply when you provide disability support services to client A's family representative.

Question 2

As outlined in the reasons for decision to Question 1 a supply is taxable when it meets the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act and the supply is not input taxed or GST-free.

You are making the same type of supply of disability support services as we have addressed in Question 1. In this scenario, you have an agreement with BE to provide support services to their client (client B).

Recipient of the supply

As discussed in Question 1 where there is a third party payer involved in a transaction it is necessary to determine what is being supplied and to whom. Your agreement is with BE and we need to consider if they are the recipient of the supply. The agreement with BE specifically states that BE is the administrator of the financial affairs of client B.

BE is acting as the trustee of client B in the best interests of their beneficiary and we consider they are in a fiduciary relationship to manage the funds of their beneficiary.

It is the primary liability in relation to the supply, and not the ultimate liability, that is the relevant factor. The fact that two parties are aware that a third party may provide the funds to be used as the consideration, be that pursuant to a contractual relationship between the payer and the patient or pursuant to a fiduciary or statutory obligation, it is not sufficient to cause the primary liability to be moved to that third party. The primary liability remains with the recipient even though the ultimate liability may rest with the third party, as trustee of a trust established for the benefit of this person.

In this scenario BE as trustee would merely be acting on behalf of a beneficiary. The primary liability in relation to the supply lies with the disabled person receiving care even though the ultimate liability, due to a contractual relationship or a fiduciary or statutory obligation between the family member or trustee and the aged or disabled person, may rest with the family member or trustee.

Supplies of community care

As you do not receive any government funding for the provision of your disability support services to this client, subsection 38-30(3) of the GST Act may apply in your case.

You have advised that your supply of disability services consists of the supervision, training and employment of support workers and other administrative duties in relation to the care of client B. These services do not involve daily personal care related services of the kind listed in Item 2.1. You supervise the provision of these types of personal care services but are not directly involved in the provision of these services as part of your supply.

As you are not providing services of a kind covered by Item 2.1 you supply does not satisfy subsection 38-30(3) of the GST Act. Therefore you are making a taxable supply when you provide disability support services to BE on behalf of their beneficiary client B.

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