Edited version of your private ruling

Authorisation Number: 1012247642780

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Ruling

Subject: GST and supplies to disabled clients

Question 1

Can you claim the input tax credit (ITC) for the purchase you make on behalf of the disabled person requesting the holiday?

Answer

No

Question 2

Do you charge goods and services tax (GST) to the client when you raise an invoice for them to pay the costs plus the administration charge?

Answer

No.

Question 3

Does the answer differ in any way to the above should the client not be a resident at one of your facilities?

Answer

No. Unless the client is not a disabled person.

Question 4

Is the service you offer in this case a taxable supply or a GST free supply of a disability service?

Answer

GST-free

Question 5

Are the "wishes" that the donations pay for a taxable supply or a GST- free supply?

Answer

The 'wishes' that you purchase with the money received by donations are a taxable supply to you provided all the conditions of section 9-5 are satisfied and are not GST-free or input taxed supplies..

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a Disability Company that provides supported accommodation, day programs and employment support for people with disabilities.

You are a Disability Service Provider recognised by both Federal and State authorities.

You receive funding from both Commonwealth and State bodies.

You do not receive specific funding for the provision of holidays. Under the funding you receive for Individual Support packages (usually state) the care plan for the disabled person may include a component for a holiday. The funding itself in these cases is directly linked to the disabled person even though the funds physically come to your bank account on their behalf.

You have been requested by some of your clients to investigate if you can purchase and provide a holiday for them. The client may or may not be a resident in one of your facilities.

The holiday would involve purchasing (for example) airfares, accommodation and attraction tickets (eg theme parks) for the client and the accompanying support person.

You would purchase the necessary components of the holiday pay the invoices and then charge the client for the costs (including the airfares and costs of the support person) plus an administration charge.

The costs of the holidays are borne by the disabled person - costs also include an administration fee which you add on and the cost of the staff person accompanying them.

You also from time to time obtain donations from the general public that are designated for your 'Wish Program'. As you are a Deductible Gift Recipient you are assuming that these donations are in fact tax deductible in the hands of the giver.

The donations to this program will be used to grant clients a "wish" and be used to offset the client's costs for this wish. For example a holiday, new teeth, a helicopter flight.

At this stage you have purchased tickets for a client for a holiday including airfares accommodation and tickets to other associated venues but have not invoiced the client pending this ruling.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999:

Section 9-5

Section 11-5

Section 11-15

Section 11-20

Section 38-40

Reasons for decision

Question 1

Summary

You are not making a creditable acquisition as it is not related to carrying on your enterprise. You are merely acting as a paying agent for the disabled person who is making the acquisition.

Detailed reasoning

Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) (all further legislative references in this private ruling are to the GST Act unless otherwise stated) provides that you must make a creditable acquisition to be entitled to claim input tax credits. A creditable acquisition is defined in section 11-5 which provides that you make a creditable acquisition if:

· you acquire anything solely or partly for a creditable purpose;

· the supply of the thing to you is a taxable supply;

· you provide, or are liable to provide, consideration for the supply; and

· you are registered, or required to be registered.

You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. However, if the thing acquired relates to making supplies that would be input taxed or private or domestic in nature, then it would not be acquired for a creditable purpose.

In this case whilst you are acquiring the holiday you are acquiring it on behalf of the disabled person, you are merely acting as the paying agent for the disabled person and it is not related to carrying on your enterprise.

Question 2

Summary

The supply of your administration services is a GST-free supply of a specialist disability service supply.

Detailed reasoning

The requirements of a taxable supply are stated in section 9-5. The requirements of a creditable acquisition are stated in section 11-5.

Section 9-5 provides that you make a taxable supply 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.

As discussed above the purchase of the holiday is made on behalf of the disabled person, and therefore is not a supply made by you, you are merely acting as the paying agent in this transaction.

However, when considering the administration costs that you incur and charge to your client what needs to be considered is if this is a taxable or GST-free supply.

The supply of a Specialist Disability Service will be GST-free under Subdivision 38-B if it satisfies the requirement of section 38-40. This section states:

38-40 Specialist disability services

A supply of services is GST-free if the supplier receives funding under the Disability Services Act 1986 or under a complementary *State law or *Territory law in respect of the services.

For the purposes of interpreting the GST Act, section 182-1 states that the headings to sections and subsections form part of the Act. Whilst the section itself does not limit the type of supply that would be GST-free, as the heading to the section refers to "Specialist disability services" it is considered that the supply must be of Specialist Disability Service to be GST-free.

The specialist disability services that are GST-free pursuant to section 38-40 of the GST Act are only those for which the supplier receives funding under the Disability Services Act 1986 (Cth) or a complementary State law or Territory law.

Accordingly, it is by reference to supplies, or the components of those supplies, for which funding is provided that will determine whether the supply satisfies section 38-40.

The Disability Services Act 2006 (VIC) provides a definition of disability services as:

"disability service" means a service specifically for the support of persons with a disability which is provided by a disability service provider

and although not defined may include such things as:

(a) accommodation services;

(b) home care and family support services;

(c) independent living training services;

(d) information services;

(e) print disability services;

(f) recreation services;

(g) respite care services;

(h) education or training services;

(i) advocacy services;

(j) therapy services;

(k) equipment services;

(l) counselling or support services;

(m) transport services.

Section 3 of the Disability Services Act 1986 makes it clear that specialist disability services are services that, among other things, assist disabled persons to integrate into the community, and that seek to achieve positive outcomes for the disabled such as independence, employment opportunities, etc. Section 9 of that Act states that the Minister can provide approval of funding for a variety of services for people with disabilities, such as accommodation, support services, recreation services, transport services, etc. Any such services will be specialist disability services if the services are provided for people with disabilities.

The administration fee that you charge for the provision of organising the holiday and associated goods and services falls within the provision of support services and in assisting disabled persons to integrate into the community and in this case would be a GST-free supply of Specialist disability services under section 38-40.

Question 3

Summary

A supply that you make regardless of the recipient will be a taxable supply if the conditions in section 9-5 of the GST are met.

Detailed reasoning

As discussed above you make a taxable supply 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.

It does not matter whether the recipients of your supplies are a resident at one of your facilities or elsewhere.

However, in this case if the supply of your administrative services is delivered to a client that is not a resident it would be a GST-free supply of Specialist disability services under section 38-40 (see reasoning below).

Question 4

Summary

The supply of your administration services is a GST-free supply of Specialist disability services under section 38-40.

Detailed reasoning

The supply of a Specialist Disability Service will be GST-free under Subdivision 38-B of the GST Act if it satisfies the requirement of section 38-40 of the GST Act. This section states:

38-40 Specialist disability services

A supply of services is GST-free if the supplier receives funding under the Disability Services Act 1986 or under a complementary *State law or *Territory law in respect of the services.

For the purposes of interpreting the GST Act, section 182-1 of the GST Act states that the headings to sections and subsections form part of the Act. Whilst the section itself does not limit the type of supply that would be GST-free, as the heading to the section refers to "Specialist disability services" it is considered that the supply must be of Specialist Disability Service to be GST-free.

The specialist disability services that are GST-free pursuant to section 38-40 of the GST Act are only those for which the supplier receives funding under the Disability Services Act 1986 (Cth) or a complementary State law or Territory law..

Accordingly, it is by reference to supplies, or the components of those supplies, for which funding is provided that will determine whether the supply satisfies section 38-40 of the GST Act.

The Disability Services Act 2006 (VIC) provides a definition of disability services as:

"disability service" means a service specifically for the support of persons with a disability which is provided by a disability service provider

Section 3 of the Disability Services Act 1986 makes it clear that specialist disability services are services that, among other things, assist disabled persons to integrate into the community, and that seek to achieve positive outcomes for the disabled such as independence, employment opportunities, etc. Section 9 of that Act states that the Minister can provide approval of funding for a variety of services for people with disabilities, such as accommodation, support services, recreation services, transport services, etc. Any such services will be specialist disability services if the services are provided for people with disabilities.

The administration fee that you charge for the provision of organising the holiday and associated goods and services falls within the provision of support services and in assisting disabled persons to integrate into the community and in this case would be a GST-free supply of Specialist disability services under section 38-40 of the GST Act.

Question 5

Summary

However, when considering the administration costs that you on-charge to your client what needs to be considered is if this is a taxable or GST-free supply.

The 'wishes' that you provide to your clients are merely part of carrying on your enterprise and do not have any GST consequences between yourself and the recipient of the 'wish'.

Detailed reasoning

When you acquire goods or services for a disabled person's wish you make an acquisition for a creditable purpose, as you acquire it in carrying on your enterprise, you provide consideration for the supply and you are registered for GST. Therefore, if the supply of the thing (for example, a motor bike or a holiday) to you is a taxable supply you will be entitled to an input tax credit for the GST paid on the item.

When considering whether there are any GST consequences for you when providing the 'wish' to the disabled person we need to look at section 9-5 to determine if the supply is a taxable supply.

Section 9-5 provides that you make a taxable supply 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.

In this case all the criteria except the provision concerning consideration have been satisfied. As you do not receive consideration from any source for the provision of the 'wish' to the disabled person there are no GST consequences when you provide the 'wish' to them.

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