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Edited version of private advice
Authorisation Number: 1012631726266
Ruling
Subject: Goods and services tax and personal care services
Question
Is the supply of personal care services by Entity A, through its directors, to a disabled person GST-free?
Answer
The supply of personal care services by Entity A through its directors to a disabled person is GST-free to the extent that the personal care services are daily living activities assistance covered by item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles.
Relevant facts and circumstances
Entity A ("You") are registered for GST and you carry on an enterprise of providing personal care services to a disabled person.
A trust (and a trustee for that trust) has been appointed for the disabled person. In this capacity the trustee (the Trustee Entity) is the trustee of certain assets for the disabled person and acts on behalf of the disabled person in relation to managing these assets.
Trustee Entity entered into an Agreement with the disabled person's parents whereby you were set up to provide care for the disabled person. The parents are your directors and shareholders.
The Agreement acknowledged that the disabled person was completely dependent and required full time care and that you were to provide that care through the parents and from time to time other respite carers.
The Agreement required that you were to invoice Trustee Entity for a set amount per calendar month for the care services you provide to the disabled person. Trustee Entity will pay these invoices from the assets of the trust.
You, through the disabled person's parents provide the following care services to the disabled person:
• Bathing, showering, personal hygiene and grooming;
• Managing incontinence and using aids and appliances to assist continence management;
• Eating and eating aids, and using eating utensils and eating aids (including actual feeding, if necessary);
• Dressing, undressing and using dressing aids;
• Moving, walking, wheelchair use and using devices and appliances designed to aid mobility;
• Communication, including addressing difficulties arising from impaired hearing, sight or lack of common language and cleaning spectacles.
As per the Agreement, you have been issuing invoices to Trustee Entity for the care services that you have been providing to the disabled person through the parents (who are your directors).
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 subsection 38-30(3)
A New Tax System (Goods and Services Tax) Act 1999 section 38-145
Reasons for decision
Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you must pay the GST payable on any taxable supply that you make.
Section 9-5 of the GST Act provides that you make a taxable supply where all of the following conditions are met:
(a) you make the supply for consideration
(b) the supply is made in the course or furtherance of an enterprise that you carry on
(c) the supply is connected with Australia; and
(d) you are registered or required to be registered for GST.
However, a supply is not taxable to the extent that it is GST-free or input taxed.
There are no provisions that make your supply of personal care services input taxed. However there are several GST-free provisions under subdivision 38-B of the GST Act which may make your supply of personal care services GST-free. You have asked us to consider if section 38-145 of the GST Act and/or subsection 38-30(3) of the GST Act is applicable to your supply of personal care services to the disabled person.
Section 38-145 of the GST Act
Section 38-145 of the GST Act provides that a supply is GST-free if it is approved child care services within the meaning of section 3 of the A New Tax System (Family Assistance) (Administration) Act 1999 ("Family assistance law"). Approved child care service, in this instance, includes approved in-home care service in respect of which approval has been granted by the Secretary of the Department of Human Services. (See Division 1 of Part 8 of the Family assistance law). From the facts you have provided us, your supply of personal care services does not meet the requirements of section 38-145 of the GST Act.
Subsection 38-30(3) of the GST Act Subsection 38-30(3) of the GST Act states: |
(3) A supply of *home 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.
(Items marked with asterisks (*) are defined in section 195-1 of the GST Act)
Home care has the meaning given by section 45-3 of the Aged Care Act 1997 (Aged Care Act). Subsection 45-3(1) of the Aged Care Act state:
Meaning of home care
(1) Home 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.
Further, item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles (Item 2.1) state as follows:
Col. 1 Item |
Column 2 Care or Service |
Column 3 Content |
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 |
A supply can only be one of 'care' or 'assistance' if it is made to the person requiring that care or assistance. Therefore 'personal care services' and 'personal assistance' cannot by its nature be things that are supplied to an entity other than an individual. Accordingly, where personal care services and personal assistance are provided to a disabled person pursuant to an agreement with a third party that is not an individual (such as a trustee of a trust) and the terms of the agreement are such that the third party is the recipient of the personal care services, the supply under these agreements is not a supply of 'home care' under subsection 38-30(3) of the GST Act
However in your case, under the Agreement with Trustee Entity, you are required to provide personal care services to the disabled person who is the recipient of your supply of personal care services. Trustee Entity, on behalf of the disabled person, pays you an amount as set out in the Agreement for the supply of personal care services that you make to the disabled person.
Therefore, considering the fact that you can only issue an invoice to Trustee Entity for the care services supplied to the disabled person, it is our view that the payment you receive from trustee Entity has a direct nexus with the personal care services you provide to the disabled person. The payment does not represent consideration for any supplies that you may have made to Trustee Entity.
The personal care services that you supply to the disabled person are supplies of 'home care' as per subsection 38-30(3) of the GST Act as the services consist of a "package of personal care services and other personal assistance provided to a person who is not being provided with residential care".
Therefore, your provision of personal care services to the disabled person will satisfy the requirements of subsection 38-30(3) of the GST Act and are GST-free to the extent that the personal care services are daily living activities assistance covered by Item 2.1 as listed above. Your supplies of personal care services to the disabled person that are not covered by Item 2.1 are not GST-free and will be taxable supplies under section 9-5 of the GST Act.
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