Edited version of private advice

Authorisation Number: 1012637072936

Ruling

Subject: GST and home care services

Question 1

What are the GST implications on the supply of the service categories 1 to 4?

Categories 1 to 4

• Supplies made by you to its clients that relate to the provision of support services provided by carers [that are of the nature of those services listed in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles]

• Supplies made by you to its clients in the course of facilitating its functions and activities [that are not of the nature are of those services listed in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles].

Advice/Answers

Please refer to 'Reasons for decisions'.

Question 2

What are the GST implications on the supply of the service category 5?

Category 5

• The recovery of costs from your clients.

• Your entitlement to an input tax credit on any amounts you paid for costs incurred on behalf of clients that include a GST component.

• Your supplies to your clients that relate to the provision of support services provided by carers [that are of the nature of those services listed in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles]

Advice/Answers

Please refer to 'Reasons for decisions'.

Question 3

What are the GST implications on the supply of the service category 6?

Category 6

• The supply of accommodation in residential premises.

• Your supplies to your clients that consist of support services provided by carers at the residential premises [ that are of the nature of those services listed in item 2.1 (daily living activities assistance) or Part 2 of Schedule 1 to the Quality of Care Principles],

Advice/Answers

Please refer to 'Reasons for decisions'.

Relevant facts and circumstances

Background

• You are registered for goods and services tax (GST).

• You are an endorsed charity for GST purposes.

• You provide a range of specialised support services to people with disabilities (clients) and their families for the purposes of enhancing their quality of life and maximum independence as active members of the community. The services include the provision of varying levels of carer support to clients to assist them to undertake and participate in the activities.

• You receive funding under the Disability Services Act 1986 (DSA) to assist in providing various support services to its clients. However, this funding is not provided in connection with the support services that are the subject of this ruling request.

• You do not receive any funding under the Home and Community Care Act 1985.(HCCA)

• You do not receive any other form of funding from the Commonwealth or State in connection with the supply of support services to its clients.

• You do not provide support services to which this private ruling request relates to participants of the National Disability Insurance Scheme.(NDIS)

• You subsidy some of the costs to clients through funds raised from fundraising events.

• You provide a range of support services to its clients. Amongst the services provided to clients is a range of services that include supported recreation, leisure and holiday service for adults who have a disability.

• The availability of Carer Support Services provided is a key element in the decision-making process for clients in deciding to attend your activity/function. The experienced carer staff members are required to attend to a wide variety of incidents that may occur at events and provide essential assistance to attendees (first aid, behavioural issues, and personal toileting issues). Without this level of carer support being available for the activities/functions, the clients would not attend. Carer support is the fundamental aspect and feature of your activities/functions.

• Costs associated with carer support for each activity/function generally forms the most significant cost item of each activity/function. You have provided examples of cost summaries your activities where the care cost ranges from 20% to 50% of the consideration for the event.

• These services are the subject of this ruling request.

Supplies subject to this private ruling request

This private ruling request relates to the application of the GST Law to the following support services provided by you to your clients:

1 to 4, there is no specific prior arrangement with individual clients in relation to care services. You provide a number of carers to be present at 'functions' attended by clients who may require assistance during the activities/functions.

Your carers do not participate in any of the functions/activities listed in the Categories below. The carers merely supervise and assist your clients to enable them to participate fully in the functions/activities.

You are the organiser and supplier of the activities/functions.

Category 1

• You arrange and organises social functions (e.g. End of Year celebrations) for your clients to attend. You hire a venue for each function.

• At each social function, you provide your clients with a combination of food and beverages, entertainment and gifts. You provide carer staff to attend the functions to care for and attend to client needs. Carer support includes, among other things, providing meal assistance to clients, attending to personal care needs, assisting with communication, specialised 'peg' feeding, behaviour management and wheelchair assistance (please note this type of carer support is consistent across all services categories listed below).

• You charge your clients a fee to attend the functions which generally cover all costs of organising the functions, including venue hire and care.

Category 2

• You organise group community social activities, including:

• Entertainment (e.g. restaurants, movies, concerts, karaoke, musical performances);

• Field trips (farm visits, train rides. aquarium visits, horse racing events); and

• Leisure activities (e.g. ten pin bowling, massages).

• You purchase food and beverage and provide these at group community social activities.

• The cost of food and beverage is included in the fee charged to clients.

• You provide carer staff to attend the functions to care for and attend to client needs.

• Third parties provide all group community social activities. You acquire tickets for, or organises attendance at, the group community social activities on behalf of your clients.

• You charge your clients a fee to attend the group community social activities which generally covers all costs of organising or acquiring tickets to the group community social activities, including the cost of purchasing food and beverage.

Category 3

• You organises special interest events such as water aerobics, literacy groups, computer classes and photography classes for its clients.

• Third parties provide all the special interest events. You provide carer staff to attend these special interest events to care for and attend to client needs such as personal care.

• You meet the cost of these activities and charge your clients a fee to recover its costs.

Category 4

• You arrange individualised recreation and leisure activities for your clients.

• You provide carer staff to attend these special interest events to care for, and attend to client needs such as personal care.

• You meet the cost of these activities and charge your clients a fee to recover its costs.

Category 5

• You arrange domestic and international holidays on behalf of your clients.

• You arrange all flights, accommodation and recreation activities associated with the domestic and international holidays on behalf of the clients.

• You provide carer staff to care for and attend to client's needs during their holiday which includes the provision of daily living activities assistance (as defined in principles made under Section 96-1 of the Aged Care Act 1997).

• You on-charges all costs you incur in relation to arranging domestic and international holidays to your clients.

• You charge your clients an inclusive fee which covers the provision of carer support to clients,

Category 6

• You own a residential property for which accommodation is made available to clients and their families.

• You also provide carer staff at the residential property to care for, and attend to client needs.

• You charge your clients a rental fee (generally below market rates) per night which covers the provision of residential accommodation.

• In limited circumstances, the supply of accommodation at this residential property is provided at a cost to the client that is less than 75% of the market value of the accommodation.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Section 11-5

Section 38-30

Section 38-250

Section 40-65

Section 40-35

Assumptions

You have provided that the care services provided in all service categories above fall within Item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles and this issue will not be addressed in this ruling.

Reasons for decision

Question 1

Summary

The care services provided at the activities/functions (in categories A to D) are GST-free under section 38-30 of the GST Act. The Centre needs to apportion between the GST-free and taxable component of the activities/functions.

Detailed reasoning

Category 1 to 4

You provide carer staff to attend these activities/functions to care for, and attend to, client needs such as personal care.

Under the above categories, the supply you make to the clients consists of two key components. They are differently identifiable components:

• the community social activity/function, and

• care services in the course of facilitating the above activities/functions.

You charge your clients a (single) fee to attend the activities/functions which covers all costs of organising the activities/functions including care services.

Where a supply consists of separately identifiable parts, GST is only payable on the taxable part, not on the GST-free or input taxed parts.

Goods and services tax ruling GSTR 2001/8 Apportioning the consideration for a supply that includes taxable and non-taxable parts explains how you can identify whether a supply includes taxable and non-taxable parts under the GST Act.

Paragraphs 19 and 20 of GSTR 2001/8 provide that:

19. Where a transaction comprises a bundle of features and acts, you must consider all of the circumstances of the transaction to ascertain its essential character. You also need to consider the effect the GST Act has on the supply or any of its individual parts. You can then determine whether the transaction is a mixed supply because it has separately identifiable parts that the GST Act treats as taxable and non-taxable, or whether it is a composite supply because one part of the supply should be regarded as being the dominant part, with the other parts being integral, ancillary or incidental to that dominant part.

20. The distinction between parts that are separately identifiable and things that are integral, ancillary or incidental, is a question of fact and degree. In deciding whether a supply consists of more than one part we take the view that you adopt a common sense approach.

To assist with the consideration of whether a supply is a mixed or composite supply, paragraphs 43 and 44 of GSTR 2001/8 provide that:

43. A mixed supply is a single supply made up of separately identifiable parts, where one or more of the parts is taxable and one or more of the parts is non-taxable, and these parts are not integral, ancillary or incidental in relation to a dominant part of the supply. On the other hand, a composite supply is a single supply made up of one dominant part and other parts that are not treated as having a separate identity as they are integral, ancillary or incidental to the dominant part of the supply.

44. In working out whether you are making a mixed or composite supply, the key question is whether the supply should be regarded as having more than one separately identifiable part, or whether it is essentially a supply of one dominant part with one or more integral, ancillary or incidental parts.

Separately identifiable parts

Paragraph 52 of GSTR 2001/8 provides the view of the Commissioner that:

… a supply has separately identifiable parts where the parts require individual recognition and retention as separate parts, due to their relative significance in the supply. This view applies where the supply is comprised of a mix of separate things, such as various combinations of goods and services, including the provision of advice.

In your circumstances:

• The care services retain its own identity and its character is clearly distinguishable from the supply of the entertainment aspect of the activity/function (food, drink, gift and other entertaining activities).

• The supply of care services is critical for the clients in considering whether they would attend the activity/function. The availability of Carer Support Services is a key element in the decision-making process for clients in deciding to attend your activity/function. The experienced carer staff members are required to attend to a wide variety of incidents that may occur at events and provide essential assistance to attendees (first aid, behavioural issues, and personal toileting issues). Without this level of carer support being available for the activities/functions, the clients would not attend. Carer support is the fundamental aspect and feature of your activities/functions.

• Although the supply of the care services can be considered to be a means of better enjoyment of the activity/function, the supply of the care services is one of the key considerations to attend the activity/function itself in conjunction with other factors.

• The cost of the supply of care services is not marginal to the total cost of the activity/function. The cost of providing carer support for each activity/function generally forms the most significant cost item of each activity/function. You have provided examples of cost summaries for activities where the care cost ranges from 20% to 50% of the consideration for the event.

All of the above indicate that the single payment for an activity/function is a payment for separate, identifiable components including the supply of care services. The supply of care services is not incidental or ancillary to the supply of the activity/function. In other words, the payment is payment for a package of mixed supply.

Taxable and GST-free supply

In your circumstances, it is not disputed that the supply of the community social activity/function is a taxable part as all of the requirements under section 9-5 of the GST Act are met. The supply of the community social activities/functions part is not GST-free or input taxed.

The supply of care services in the course of facilitating the above activities/functions is not input taxed under any provision of the GST or other Acts.

We need to consider whether the supply of carer services in the activities/functions organised by you is GST-free.

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

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.

An asterisk denotes a defined term in the GST Act

The term "home care" is defined in section195- 1 of the GST Act to take the meaning given by section 45-3 of the Age Care Act 1997 (Age Care Act).

Subsection 45-3(1) of the Aged Care Act 1997 states:

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.

The care services provided in the course of facilitating the above activity/function must be considered in the light of the definition of home care above.

Services provided to one or more aged or disabled people

The words in 38-30(3) of the GST Act indicates that services can be provided to one or more aged or disabled persons. This seems to contemplate the possibility of home care services being provided to multiple recipients (e.g. in a group settings where a carer can provide services to a number of clients during a period of time).

Services of a kind covered by item 2.1 (daily living activities assistance of Part 2 of Schedule 1 to the Quality of Care principles (item 2.1 services)

You have provided that the carer support provided by you consists of providing carer staff to be present and available to perform services such as, providing meal assistance to clients, attending to personal care needs, assisting with communication, specialised 'peg' feeding, behaviour management and wheelchair assistance where needed by their clients. These services are of a kind covered by item 2.1.

Home care

The GST Act uses the definition of 'home care' in the Aged Care Act, which 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." For the purposes of the GST Act, the definition of 'home care' only excludes services being provided to a person who is in a residential care setting and is therefore not limited to care services provided in a care recipient's home, Therefore, item 2.1 services provided outside the home (such as at community or social activities) can be 'home care' for the purposes of the GST Act.

Package of personal care services:

To be a package of personal care services, the clients have to be receiving two or more of the item 2.1 services. The carer support provided by you includes more than one type of 2.1 services, and therefore will meet the requirement to be a package of personal care services. A package of personal care services includes being present and available to provide a variety of such services where needed.

In your circumstances, the care services provided by its staff fall into the home care services as defined under 45-3 of the Aged Care Act as stated above. The reason for the presence of care staff at the activity/function service is to assist the clients in need during the activity/function. You have provided that a number of services listed under Item 2.1 are performed during the activity/function (meal assistance, communication assistance, attending to personal care needs etc.).

In conclusion, the care services provided at the activities/functions meet the requirement under subsection 38-30(3) of the GST Act and the supply of such services will be GST-free.

You have advised that you do not require a detailed discussion on how to apportion the consideration to different components of the mixed supply. A general guidance, based on GSTR 2001/8, is provided as follows:

• The method (direct or indirect) that you use must be reasonable, based on all the circumstances, supportable by the facts in the particular circumstances (paragraph 92).

• You need to keep records that explain the transaction (paragraph 95).

It is also noted that the activity/function is also open to people other than the disabled (e.g. family members, friends) the apportionment does not apply to those people. The payment for the entry into the activity/function is wholly taxable as the consideration is made for one component not both.

Question 2

Category 5

Summary

The reimbursement is not consideration for any supply made by you. There will be no GST implications. However, the separate service fee is consideration for a supply and is subject to GST.

Detailed reasoning

Where you make bookings for flights, accommodations or recreation activities on behalf of your clients for which the clients reimburse you, you are not making a supply or acquisition in relation to that transaction. You are merely acting as an agent for the client.

As you are not making a taxable supply to your client, you do not have to remit GST on the reimbursement you receive from the client. You are not making an acquisition (the clients are) and you are not entitled to claim an input tax credit for any GST included in the cost of the flights, accommodation etc.

Separate service fee

However, any component of the fee charged separately to the clients to cover your own costs in arranging the holiday (such as administrative costs) is a supply of services (that of arranging the flights or accommodation or recreation activities) under paragraph 9-10(2)(b) of the GST Act. This supply is subject to GST because the supply meets all the requirements under section 9-5 of the GST Act and is not GST-free or input taxed.

A service fee (or part of the service fee) relating to the provision of carers to provide a package of item 2.1 services to the client during the client's holiday will be a GST-free supply, for the same reasons set out in the reasons for decision for Question 1 (Categories 1 to 4 - see above).

The same apportionment rule applies to separate the taxable part (services of arranging the holiday) and the GST-free part (care services).

You are liable for GST on the taxable supply of the services above (that it charges a service fee) and is also entitled to an input tax credit for GST included in the cost of things you acquired to make the supply.

Question 3

Category 6

Summary

Generally the supply of residential accommodation is input taxed. However, where the concession under subparagraph 38-250(1)(a)(i) applies, the supply is GST-free.

The GST treatment of care follows the reasoning in question 1.

Detailed reasoning

Residential premises

For GST purposes, we consider that the residential property owned by you is residential premises which you rent to clients to use predominantly for residential accommodation.

Under section 40-35 of the GST Act, a supply of premises that is by way of lease, hire or licence is input taxed to the extent that the premises are to be used predominantly for residential accommodation (regardless the term of occupation).

The supply of residential accommodation is input taxed under section 40-35 of the GST Act.

You also provided that in limited circumstances, the supply of accommodation at this residential property is provided to the clients that is less than 75% of the market value of the accommodation.

As you are an endorsed charity and a gift deductible entity, sub-paragraph 38-250(1)(a)(i) of the GST Act applies to make the supply GST-free. This subparagraph provides that:

1. A supply is GST-free if:

Where the requirements under sub-paragraph 38-250(1)(a)(i) of the GST Act are met, the supply of the accommodation is GST-free. If the supply is GST-free, you will not be liable for GST on the accommodation charges to the client. You will be entitled to claim input tax credits for GST included in the price of acquisitions relating to the GST-free supply.

Supply of carer staff

You also provide carer staff at the residential property to care for and attend to client needs.

You are entitled to input tax credits for GST included in the price of acquisitions relating to the provision of the caring services, as the supply of these services is not input taxed.

Similar to the reasoning above, the care services meet the requirements in section 38-30 of the GST Act to be GST-free (see discussion above on the GST treatment and the apportionment in question 1)

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