Edited version of your written advice

Authorisation Number: 1012990882798

Date of advice: 30 March 2016

Ruling

Subject: GST and supply of services to disabled people

Question

Is the supply of services to people with disabilities a GST-free supply?

Answer

No. The supply of services is not a GST-free supply. Please refer to the reason for decision.

Relevant facts and circumstances

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

• You provide services such as Respite/Education program designed to provide a post school age person with varying levels of disability assistance and instruction that has the goal of assisting these persons in recognising that each person is unique and deserves equal opportunity to develop.

• Programs are group based activities designed to meet individual needs of the persons within the group.

• The services involve centre based activities which includes instruction on general hygiene, culinary and general cooking skills, the requirements for cleanliness, computer based activities and guidance in treating others as individual and respecting their individuality.

• The non-centre based activities include interaction with the general community by participating in sporting and cultural activities, visiting various shops and retails establishments where participants are taught the fundamentals in performing retail transactions like shopping for basic requirements, food or enjoying a refreshment break.

• In the past, you had arrangements with the Department of Communities and Social Inclusion (DCSI) to provide the services to people with disabilities and received funding directly from DCSI.

• DCSI has commenced providing the funding direct to the recipient of the supply or their representative or guardians in order to prepare for the implementation of National Disability Insurance Scheme (NDIS).

• You are now providing the services to the people with disabilities under agreements with the participants or their guardians and receive funding directly from them.

Relevant legislative provisions

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 38-38, 38-40

Reasons for decision

The supply of a Specialist Disability Services will be GST-free under Subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999 (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 Services 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 186 (Cth) or a complementary State law or Territory law.

Accordingly, it is by reference to suppliers, 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.

In this case, it should be determined whether the services you provide to disabled people registered with the Disability Services Commission or Department of Communities and Social Inclusion (DCSI) are GST-free specialist disability services pursuant to section 38-40 of the GST Act. In addition, this section provides that the 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.

You will note that an essential element for the supply of services to be GST-free under section 38-40 of the GST Act is that the supplier receives funding in respect of the services. It follows that if you, the supplier, receive payment for the services you make to disabled people or their parents or representatives who, in turn, received the funds from which to pay you, from the Disability Services Commission or DCSI, that element will not be satisfied. You, will not have received the funding, rather the funding will have been received by the recipient of the supply or their parents or representatives. That being the case, the supply of services to disabled people is such that it will not come within the operation and effect of section 38-40 of the GST Act and will not be GST-free.

Based on the facts provided, we consider that the services provided by you are not specialist disability services. Although you received funding from the DCSI in the past, currently you receive payment from the recipient of the supply or their parents or representatives who receive funding from the DCSI, for your services. Therefore, the supply of services will not satisfy the requirements of section 38-40 of the GST Act and therefore this supply will not be GST-free.

National Disability Insurance Scheme

Amendments to the GST Act have been made to ensure that certain supplies to a participant are also GST-free where the supply is of a kind determined by the Disability Services Minister and the supply meets the other requirements of section 38-38 of the GST Act.

The supply must be:

• to a participant for whom a plan is in effect under section 37 of the National Disability Insurance Scheme Act ("NDIS Act") which means the plan must be approved by the National Disability Insurance Agency ("The Agency")

• of one or more of the reasonable and necessary supports specified in the statement of supports in the plan. A participant's plan will contain a statement of supports and will identify those that are approved as reasonable and necessary.

• made under a written agreement between the supplier and the participant (or another person) that both:

• Identify the participant,

• State that the supply is one or more of the reasonable and necessary supports specified in the statement of supports in the plan.

The written agreement can be between the supplier and a person other than the participant. Other people can include those who manage the plan and funding for the participant. This would include the Agency, a plan management provider registered with the Agency or someone like a guardian or relative of the participant.

• of a kind determined in a legislative instrument by the Minister responsible for Disability Services.

The GST-free Supply (National Disability Insurance Scheme Support) Determination 2013 ("the Determination") lists 22 kinds of supplies which are GST-free where the supply meets the other conditions in section 38-38 of the GST Act.

If the services which you are registered to provide are listed in Schedule 1 to the Determination, those services will be GST-free provided all the requirements of section 38-38 of GST Act are satisfied.

You advised us that DCSI has commenced providing funding to the recipient of the supply or to their representatives in order to prepare for the implementation of NDIS. Currently, your supply of services is not being made under the NDIS as the scheme has not been implemented in your state. Therefore, your supply of services will not satisfy the requirements of section 38-38 of the GST Act and will not be GST-free.

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