Edited version of your private ruling

Authorisation Number: 1012447820644

Ruling

Subject: GST and disability support services

Question 1

Are the support services that you provide to disabled people in their own homes GST-free?

Answer 1

The support services that you provide to disabled people in their own homes where the supply is of a kind provided in the quality care principles will be GST-free. Please refer to the reasons for decision.

Question 2

Are the support services that you provide to disabled people outside their homes, GST free?

Answer 2

The support services that you provide to disabled people outside their own homes will be a taxable supply.

Question 3

Are your client transportation services GST-free?

Answer 3

No, your client transportation services are taxable.

Question 4

Is the supply of personal care services provided by you on behalf of third parties subject to GST?

Answer 4

If the third party is acting as an agent for the recipient of the supply the supply of personal care services is of a kind provided in the quality care principles, it will be GST-free. If the supply is to the third party the supply will be a taxable supply of professional services.

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 registered for goods and services tax (GST).

You are a company with a pool of casual disability support staff. Your staff are engaged by disabled individuals (as defined under the Disability Act 2006) to provide them with a variety of support services. Typically your staff could be expected to provide support with the following tasks on an in-home shift:

· Personal care, such as, showering, toileting, hygiene, grooming, changing incontinence aids, hoisting, changing a catheter and teaching independent living skills.

· Household duties, such as, writing shopping lists, cleaning, restocking supplies, washing, paying bills and ensuring that homes are in a safe and clean condition.

· Preparing and cooking meals and assisting with feeding which may include feeds with medical equipment, such as PEG feeds.

· Taking medicine and supporting medical conditions, such as, epilepsy, anaphylaxis and asthma.

· Other support, such as, ensuring safety and adherence to behaviour management plans, manual handling plans and medical plans.

You also provide services with your clients outside the home, such as, shopping, movies and activities that they enjoy.

You do not receive subsidies or funding in relation to the supplies that you provide.

At times, your staff will, in their own vehicle, transport clients. You reimburse the staff member for costs associated with this and your clients are charged a fee.

You advise you provide community care services on behalf of other agencies where they may be short staffed. You make the supply to the disabled person, the recipient pays the agency which pays you and they extract an administration fee. You do not have any standard contracts on this arrangement. You advise the other agency may provide a contract.

You invoice individuals for your services and they pay you directly. These individuals typically receive money to pay such invoices from Government funding (such as, Individual Support Packages, short term Government funding from other funded disability agencies or family contributions).

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 7-1

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

A New Tax System (Goods and Services Tax) Act 1999 Section 9-80

A New Tax System (Goods and Services Tax) Act 1999 Section 38-30.

Reasons for decision

Question 1

Subsection 7-1(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies. Section 9-5 of the GST Act 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 for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Division 38 of the GST Act sets out those supplies which are GST-free. Where a supply is GST-free, no GST is payable on the supply and you are entitled to an input tax credit for anything acquired to make the supply.

You have stated that you do not provide any accommodation and that you do not receive any subsidies or funding in relation to your supplies.

Of relevance to your circumstances is subsection 38-30(3) of the GST Act which states:

(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.

(asterisked terms are defined in section 195-1 of the GST Act)

'Community care' is defined in section 195-1 of the GST Act to have the meaning given by section 45-3 of the Aged Care Act 1997 which states that it 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.

On the facts provided, you supply personal care services to disabled individuals (as defined under the Disability Act 2006). Therefore, paragraph 38-30(3)(a) is satisfied.

Item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles (Item 2.1) provides a list of eligible types of personal 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; and

(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.

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.

Where a non-government funded supplier provides a package of care services consisting of some Item 2.1 services and other services, the supply may be a mixed supply comprising a separately identifiable part that is the supply of community care (GST-free) and a part that is taxable.

If the supply is a mixed supply, the supplier will need to apportion the consideration between the component that is taxable and the component that is GST-free. Goods and Services Tax Ruling GSTR 2001/8 'apportioning consideration for a supply that includes taxable and non-taxable parts' explains a mixed supply and how to apportion the consideration between the GST-free and taxable parts of such a supply.

Where other services such as cooking and cleaning are provided in addition to services covered by item 2.1 of Part 2 of Schedule 1 to the quality of care principles, such services will not be GST-free. As such, an apportionment will need to be made in accordance with section 9-80 of the GST Act which states that:

9-80 The value of taxable supplies that are partly GST-free or input taxed

If a supply (the actual supply) is:

(a) partly a taxable supply; and

(b) partly a supply that is GST-free or input taxed;

the value of the part of the actual supply that is a taxable supply is the proportion of the value of the actual supply (worked out as if it were solely a taxable supply) that the taxable supply represents.

It is considered that in determining a reasonable method of apportionment between those services which are GST-free and those which are taxable, a time basis will be acceptable. There may be other methods of apportionment that may also be appropriate.

Question 2

The support services you provide to the disabled outside of the home of clients are not included at Item 2.1 of Part 2 of Schedule 1 to the quality of care principles and therefore does not satisfy subsection 38-30(3)(b) of the GST Act. Therefore the supply of your services outside of the home will be a taxable supply.

Question 3

Transportation of clients is not included at Item 2.1 of Part 2 of Schedule 1 to the quality of care principles and therefore does not satisfy subsection 38-30(3)(b) of the GST Act. Accordingly, this transportation will be a taxable supply.

Question 4

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 supplier of the care services and the client), there is a single supply to which the GST Act applies and the recipient of that supply is the client.

However, where there is a third party 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 the supplier of the care services, with a further supply of care services to the client.

A third party will be the recipient of a supply where:

· that third party engages the entity to provide something to them or to someone else,

· that third party, by agreement with the entity, determines what is to be provided to them or to someone else, and

· there is a binding obligation between that third party and the entity for the thing to be provided and the third party is liable to provide payment.

Where all the above elements are satisfied there will be a supply made to the third party payer. There is also a further supply that is made where an individual receives care services.

Generally, where there is a supply made to a third party payer, the arrangements will result in a further supply where an individual receives care services. This subsequent supply is considered separately to any supply between the supplier of the care services and the third party payer.

Goods and Services Tax Ruling GSTR 2000/37 provides the Australian Taxation Office view of agency relationships and the application of the GST law. Paragraphs 10-19 of the Ruling provide an explanation of what is meant by principal/agent relationships (agency relationships). Paragraphs 10-12 of the Ruling state:

10. An intermediary may be authorised by another party to do something on that party's behalf. Generally, the intermediary is called an agent. The party who authorises the agent to act on their behalf is called the principal

11. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties.

12. The principal is bound by the acts of an agent as a result of the authority given to the agent. The relationship between a principal and an agent is a consensual one so that no party can claim to be a principal's agent unless both parties consent to the creation of the agency.

Paragraph 28 of GSTR 2000/37 outlines factors that indicate whether an agency relationship exists. It provides that in most cases, any relevant documentation about the business relationship, the description used by the parties and the conduct of the parties will establish the existence of an agency relationship. That is, whether an agency relationship exists does not depend on the terminology adopted by the parties, but on the true nature of the relationship. The relationship between the parties is determined by an examination of the particular facts surrounding relevant transactions.

You advised you are engaged by other disability agencies who act as your agent with the disabled person. The other disability agencies act as your agent and charge a commission for their services. In this type of arrangement the disability agency acts on your behalf as principal and your services are to the disabled person who is also the recipient of the supply. Your supply of the services listed at Item 2.1 of Part 2 of Schedule 1 to the quality of care principles under this arrangement will be GST-free.

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