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Edited version of your written advice

Authorisation Number: 1051265665768

Date of advice: 15 August 2017

Ruling

Subject: GST and home care

Question

Did goods and services tax (GST) apply to the services you provided to the consumer for which you received payment from Entity B?

Answer

Yes in part. You were making a mixed supply of taxable and GST-free services.

The services of a kind covered by item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles 2014 were GST-free under section 38-30(3) of the A New Tax System (Goods and Services Tax Act 1999.

Relevant facts and circumstances

You are registered for GST.

You provided services to the consumer who has a disability and receives a funding package (the funding) from a State Government Department (the Department). You did not receive the funding from the Department.

The services you provided to the consumer were predominately community access (fishing, movies, spend time with friends, grocery shopping, morning walks), assisting with email writing and reading, organising appointments, some transfers, meal preparation as required and emotional support.

You have considered the list of daily living activities assistance in item 2.1 of Part 2 of Schedule 1 of the Quality of Care Principles 2014 and determined that you also provided the following assistance from the list:

The consumer is able to self-direct their support and have control over the disability services they receive however they are unable to manage the financial side of their funding package.

The consumer had engaged Entity B to hold and oversee the funding package which included paying for the services you provided to the consumer.

You invoiced the consumer directly for your services which are GST inclusive. The consumer would pass the invoices to Entity B for payment.

You did not have a written agreement with the consumer as your services were purchased on an as needs basis.

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 Section 38-30

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

A New Tax System (Goods and Services Tax) Act 1999 Section 38-40.

Reasons for decision

In this reasoning:

You must pay GST on any taxable supply you make.

Section 9-5 provides that you make a taxable supply if:

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

You were making a supply of services to a disabled person (the consumer) in Australia for consideration in the course of your care enterprise and you were (and continue to be) registered for GST. There are no GST provisions whereby your supply would be input taxed. Therefore, if your supply was not GST-free all the requirements of a taxable supply under section 9-5 are satisfied and your supply would be taxable.

Disability support provided to Relevant Scheme participants

Section 38-38 provides that certain supplies of disability supports to participants of the Relevant Scheme are GST-free.

A supply to a participant of the Scheme is GST-free if the supply:

As the consumer was not a participant in the Relevant Scheme, section 38-38 does not apply to your services.

Specialist disability services

Section 38-40 provides that all services for which the supplier receives funding under the Disability Services Act 1986, or under a complementary state or territory law, will be GST-free.

As you did not receive any government funding, section 38-40 does not apply to your services.

Home care services

Government funded supplier

The supply of care services to an aged or disabled person by a government funded supplier is GST-free where the requirements of subsection 38-30(1), (2) or (4) are met.

As you did not receive any government funding, subsections 38-30(1), (2) or (4) do not apply.

Non-government funded supplier

The supply of home care services to an aged or disabled person, by a non-government funded supplier, is GST-free under subsection 38-30(3) to the extent that the services are of a kind covered by item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles 2014 (Item 2.1).

'Home care’ has the meaning given by section 45-3 of the Aged Care Act 1997 which provides:

Item 2.1 lists the following services.

Item

Column 1

Care or service

Column 2

Content

2.1

Daily living activities assistance

Personal assistance, including individual attention, individual supervision, and physical assistance, with the following:

(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.

The ATO Charities consultative committee resolved issues document (search for 'QC 27139’ on the ATO website) lists the following services that are not covered by Item 2.1:

The services you provided to the consumer were predominately services that are not covered by Item 2.1 and would not be GST-free, that is they were be taxable supplies. However, there are some services that were covered by Item 2.1.

It is necessary to determine whether or not your supply of services that were covered by Item 2.1 are separately identifiable, in which case they will be GST-free, or are integral, ancillary or incidental to your taxable supply of services, in which case they will be taxable.

The information that you have provided indicates that the services you provided to the consumer that are covered by item 2.1 amount to about X minutes per day. These services are GST-free under subsection 38-30(3) unless they are considered to be integral, ancillary or incidental to the taxable services.

It is noted in paragraph 20 of Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts that the distinction between parts that are separately identifiable and things that are integral, ancillary or incidental, is a question of fact and degree.

Paragraph 60 of GSTR 2001/8 provides that as a means of minimising compliance costs, you may treat something (or things taken together) as being integral, ancillary or incidental if the consideration that would be apportioned to it (if it were part of a mixed supply) does not exceed the lesser of :

The services covered by item 2.1 would exceed $3.00. Taking into account the amount of time spent and total spent and total fees charged, it is considered that these services were not integral, ancillary or incidental to the taxable services in their own right.

As the services covered by item 2.1 are not integral, ancillary or incidental to the taxable services, the total consideration would need to be apportioned between the taxable supplies and the GST-free supplies. It is considered that apportionment on a time basis would be a reasonable method of apportionment.

An example is outlined in paragraph 104 and 105 of GSTR 2001/8:


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