Edited version of private ruling

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Ruling

Subject: GST and residential care

Question 1

Is GST applicable to payments for accommodation received by Entity A?

Answer

No, provided that certain conditions are met.

Relevant facts and circumstances

You are registered for GST.

You operate residential premises and are authorised to conduct a Supported Residential Service (SRS).

The SRS that you operate provide accommodation and services to people who are aged and disabled and the SRS is registered with and overseen by the relevant state department.

The particular website provides a definition of an SRS:

SRSs are private businesses that provide accommodation and personal care. This care usually includes assistance with showering, personal hygiene, toileting, dressing, meals and medication, as well as physical and emotional support. Some SRSs also provide nursing support.

You have previously reported the payments you receive from residents of the SRS as taxable supplies on your activity statements and remitted GST on these amounts.

Relevant legislative provisions

Division 7, Division 9 and Subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999

Summary

A supply of accommodation will be GST-free when it is made to a person in the course of making a supply to that person that is GST-free according to subsections 38-25(1), (2) or (3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

GST will not apply to the payments you receive from residents for Supported Residential Service (SRS) accommodation, provided that the resident has a continuing need for and is provided with at least one of the services listed in Items 2.1 or 3.8 of Schedule 1 to the Quality of Care Principles, in accordance with subsection 38-25(3) of the GST Act.

Detailed reasoning

Taxable supplies

According to Division 7 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), GST is payable on your taxable supplies.

Section 9-5 of the GST Act provides the requirements necessary for a supply to be taxable and 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.

Note: *asterisk denotes a term defined in the GST Act.

GST-free supplies

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 the supply of a right to receive a supply that would be GST-free.

Under section 38-25 of the GST Act, certain supplies of residential care services are GST-free.

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 to that person that is GST-free under subsection (1), (2), or (3).

Government-funded supplier

Where an entity receives government funding in a connection with the supply of residential care services, subsection 38-25(2) of the GST Act may apply. Provided that all of the other requirements of subsection 38-25(2) are met, paragraph 38-25(2)(c) of the GST Act states that where the supplier receives funding from the Commonwealth, a state or a Territory in connection with the supply, the supply of services will be GST-free.

Information on the particular state health website about SRS clearly states that SRS do not receive Government funding or direct Government subsidies. Therefore, it is unlikely that the residential care services provided by you would fall under subsection 38-25(2) of the GST Act.

Non-government-funded supplier

According to subsection 38-25(3) of the GST Act:

A supply of services is GST-free if:

(a) the services are provided to one or more aged or disabled people in a residential setting; and

(b) 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

(c) the services include, and are only provided to people who require, the services (care services) set out in:

(i) item 2.1 (daily living assistance) of Part 2 of that Schedule; or

(ii) item 3.8 (nursing services of Part 3 of that Schedule).

The term "residential setting" is not defined in the GST Act, however the ATO considers the term in paragraph 38-25(3)(a) to mean:

(a) a residential care facility complying with state or territory legislation regulating the supply of residential care services, and

(b) in those states or territories that do not regulate residential care facilities, a congregate care facility (such as a nursing home or aged care hostel) conducted by the supplier of residential care services. The facility must primarily provide residential care services. The accommodation is to be suitable for the aged, frail and/or disabled residents having regard to their long term needs as assessed in accordance with the written agreement with the supplier of the residential care services.

You have stated that the SRS that you operate provide accommodation and services to people who are aged and disabled. In addition, the SRS are registered with and overseen by the relevant state health authority under the relevant act. Accordingly it is considered that you have satisfied the requirements of paragraph 38-25(3)(a) of the GST Act.

Paragraph 38-25(3)(b) of the GST Act requires that 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. The Aged Care Minister has made a written determination: GST-free Supply (Residential Care - Non-Government-Funded Supplier Determination 2000 (the Determination). Section 4 of the Determination provides that for the purposes of paragraph 38-25(3)(b) of the GST Act, the services mentioned in Schedule 1 of the Determination, if supplied in the circumstances mentioned in section 5 of the Determination, are of a kind covered by Schedule 1 to the Quality of Care Principles.

The Determination states that the following requirements must be met for the services to be covered by Schedule 1 to the Quality of Care Principles:

· the care recipient must have a continuing need for the services mentioned in item 2.1 or 3.8 of schedule 1; and

· the services are supplied, under a written agreement, as a package made up of:

· the services mentioned in item 2.1 or 3.8; and

· the other services mentioned in Schedule 1 that are needed by the care recipient; and

· accommodation; and

· the charges for services and the accommodation are payable to the same entity.

Therefore, where the resident has a continuing need for at least one of the services covered by Item 2.1 and the service/s are provided together with other services and accommodation, you will satisfy the requirements of paragraph 38-25(3)(b) of the GST Act.

To meet the requirements of paragraph 38-25(3)(c) of the GST Act, the services you provide must include and only be provided to people who require the services set out in items 2.1 and 3.8 of Schedule 1 to the Quality of Care Principles. These items have been reproduced below.

Services listed in item 2.1 and 3.8 of Schedule 1 to the Quality of Care Principles

2.1 Daily living activities assistance

Personal assistance, including individual 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

(c) 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

3.8 Nursing services

Initial and on-going assessment, planning and management of care for residents, carried out by a registered nurse

Nursing services carried out by a registered nurse, or other professional appropriate to the service (eg medical practitioner, stoma therapist, speech pathologist, physiotherapist or qualified practitioner from a palliative care team)

Services may include, but are not limited to, the following:

(a) establishment and supervision of a complex pain management or palliative care program, including monitoring and managing any side effects

(b) insertion, care and maintenance of tubes, including intravenous and naso-gastric tubes

(c) establishing and reviewing a catheter care program, including the insertion, removal and replacement of catheters

(d) establishing and reviewing a stoma care program

(e) complex wound management

(f) insertion of suppositories

(g) risk management procedures relating to acute or chronic infectious conditions

(h) special feeding for care recipients with dysphagia (difficulty with swallowing)

(i) suctioning of airways

(j) tracheostomy care

(k) enema administration

(l) oxygen therapy requiring ongoing supervision because of a care recipient's variable need

(m) dialysis treatment

Therefore, when you provide services covered by Item 2.1 or 3.8 to people who require these services, paragraph 38-25(3)(c) of the GST Act will be satisfied.

Are you making GST-free supplies of accommodation?

According to the requirements of section 38-25 of the GST Act, the payments that you receive from residents for accommodation and services will be GST-free, provided that the resident has a continuing need for and is provided with at least one of the services listed in Item 2.1 or 3.8 of Schedule 1 to the Quality of Care Principles.

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