Edited version of private advice

Authorisation Number: 1052390019039

Date of advice: 29 April 2025

Ruling

Subject: GST - NDIS specialist disability accommodation

Question

Is your supply of a property to be constructed and approved as Special Disability Accommodation (SDA) under a head lease a taxable supply under section 9-5 of A New Tax System (Goods and Services) Act 1999 (GST Act)?

Answer

No. Your supply of the property under a head lease will not be a taxable supply under section 9-5 of the GST Act. It will be an input taxed supply of residential premises under section 40-35 of the GST Act.

This ruling applies for the following periods:

1 October 20YY to 30 June 20YY

The scheme commenced on:

28 October 20YY

Relevant facts and circumstances

You are registered for GST.

On xxxx, you purchased vacant land (Property).

You bought the Property with the intention of constructing Specialist Disability Accommodation (SDA) property.

On xxxx, the building permit was obtained, and a contract was entered into for the construction of a New Specialist Disability Accommodations Dwelling in accordance with National Disability Insurance Scheme (NDIS) SDA design standards.

The construction of the Property is determined as Building Classification 3 of the National Construction Code.

There is only one dwelling (or house/home) that will be constructed at the Property. This dwelling will house XXX NDIS participants.

The number of support workers is directly related to the number of NDIS participants. The home is designed for High Physical Support Participants. Each NDIS participant may have XXX support workers, however it is expected that there will be XXX support worker per participant. Hence, there will be a minimum of XXX or a maximum of XXX support persons per NDIS participant.

The Property will be a 24-hour SDA home, hence there will always be support workers available either to provide supervision and care or to be available to support the NDIS participants in community activities in or out of the Property.

The Property has a room for Onsite Overnight Assistance (OOA). Various support persons will only use this room for that purpose. The support workers will not be living permanently on the Property.

In an SDA property, a NDIS support worker provides assistance with daily living, personal care and other activities to help the resident maintain independence and improve their quality of living, while collaborating with other support providers to ensure that the residents' choice and control is respected.

The Property is not just built for compliance purposes, they are crafted to enhance the quality of life for NDIS participants by incorporating cutting-edge technology, wellness-focused design, and participant-centric innovations.

The Property includes smart automation, allowing residents to control doors, lighting, climate, and security through voice activation or mobile applications. It also includes height-adjustable benchtops, automated blinds, and emergency response systems to ensure comfort and safety. The hydrotherapy and wellness room features rehabilitation equipment, supporting participants' physical and mental well-being.

Designed with universal accessibility, the Property features wider hallways, ceiling hoist tracks, zero-threshold flooring, and height-adjustable amenities, making mobility effortless. Spacious bedrooms with smart beds, noise-reducing insulation, and private gardens provide a serene living space. Bathrooms are equipped with roll-in showers, sensor taps, and bidet-integrated toilets, offering ultimate convenience.

Outdoor areas promote social engagement and relaxation with accessible gardens, therapy spaces, and wheelchair-friendly pathways. Sustainability is a priority, with solar panels, passive heating, and air filtration systems ensuring long-term comfort. With 24/7 monitoring, emergency response, and high-quality support services, you contend that the Property allows for empowering participants with choice, dignity, and independence.

The Property is designed to provide each NDIS participant with their own private bedroom and ensuite bathroom, ensuring dignity, comfort, and accessibility. These purpose-built homes include spacious communal areas, such as a living area, dining space, fully accessible kitchen, and a well-equipped laundry room, fostering social interaction while maintaining independence.

The NDIS participants are also provided with a communal activity room, designed for therapy, recreation, or personal use, offering flexibility to meet individual needs. The homes have been strategically designed with ample space for specialised equipment, mobility aids, and storage for bulk sanitary items, ensuring a clutter-free and functional environment.

The architectural specifications illustrate the modifications that will be made to the dwelling. Some of these include but are not limited to:

•                     The garage door will be provided with an appropriate compliant method of automated opening deemed to be 'accessible,' which includes installing four button wireless wall mount remote control between 900mm - 1000mm above garage floor level.

•                     There are no internal (concealed) downpipes

•                     The bathrooms for the participants are fully compliant with NDIS requirements, so do not have shower screens, however the bathroom for the Overnight Assistant will have a shower screen comprising 1800- 2000 mm high frameless screen panels and pivot-hung door of selected powder coat colour with safety clear glazing.

•                     The entire floor plan is on a single level, with no steps within as all of the house meets disability access circulation clearances.

•                     All power outlets meet the requirements of the NDIS, including mounting heights between 600mm and 1100mm above floor and 150mm above benches, unless nominated otherwise on the drawings or on site (i.e. Power above bedroom doors or where at height adjustable kitchen benches).

The Property is designed to provide accommodation for High Physical Supports, to allow NDIS Participants with fully accessible funding to benefit from living in this home. The Property is not a Robust dwelling.

Upon completion of the construction, you will lease the Property to an SDA-Registered provider (SDA provider) under a head lease. The SDA provider will then sublease the Property to a NDIS SDA participant (NDIS participant).

You are not a qualified SDA provider and cannot directly lease the property to NDIS participants or enrol the dwellings as SDA under the NDIS.

The SDA provider will provide the furniture and equipment for the NDIS participant. The Property was purchased with an intention of developing the vacant land for profit.

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 38-38

A New Tax System (Goods and Services Tax) Act 1999 section 40-35

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

Section 9-5 of the GST Act provides that:

You make a taxable supply if:

•                     you make the supply for consideration; and

•                     the supply is made in the course or furtherance of an enterprise that you carry on; and

•                     the supply is connected with the indirect tax zone; and

•                     you are registered, or required to be registered.

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

Under section 38-38 of the GST Act, a supply to a NDIS participant is GST-free if all of the following requirements are met:

•                     the NDIS participant has a NDIS plan in effect

•                     the supply is of reasonable and necessary supports that are specified in the statement of supports in the participant's NDIS plan

•                     there is a written agreement between you and the NDIS participant (or another person)

•                     it is a supply covered by one of the tables in the A New Tax System (Goods and Services Tax) (GST free Supply-National Disability Insurance Scheme Supports) Determination 2021 (NDIS Determination).

The supply by you, as the property owner, to the SDA provider under the head lease would not satisfy the GST-free requirements in section 38-38 of the GST Act. This is because one of the requirements in section 38-38 is that the supply is made to a NDIS participant. Your supply under the head lease is not a supply to a NDIS participant - it is a supply to an SDA provider.

Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) further provides the Commissioner's view regarding supplies. Relevantly, paragraph 155 states:

155. Under the GST health provisions in Subdivision 38-B, subject to certain exceptions [51A], the supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. This outcome results from the specific wording in some health provisions, whilst in other provisions it is due to the nature of the services themselves. Where this requirement is imposed, a GST-free supply of a health service cannot be made to a business entity or a non-profit body.

Consistent with paragraph 155 in GSTR 2006/9, the supply of the lease must be to a NDIS participant. In this case, the supply is not being made by you to a NDIS participant, rather you enter into an agreement with the SDA provider. On this basis, you do not satisfy the requirements of section 38-38 of the GST Act.

Section 40-35 of the GST Act which relates to residential rent, states:

(1)          A supply of premises that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed if:

(a)         the supply is of residential premises (other than a supply of commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises); or

(b)         the supply is of commercial accommodation and Division 87 (which is about long-term accommodation in commercial premises) would apply to the supply but for a choice made by the supplier under section 87- 25.

(1A)          A supply of a berth at a marina that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxedif:

(a)         the berth is occupied, or is to be occupied, by a ship used as a residence; and

(b)         the supply is of commercial accommodation and Division 87 (which is about long-term accommodation in commercial premises) would apply to the supply but for a choice made by the supplier under section 87- 25.

(2)          However:

(a)          the supply is input taxed only to the extent that the premises are to be used predominantly for residential accommodation (regardless of the term of occupation); and

(b)          the supply is not input taxed under this section if the lease, hire or licence, or the renewal or extension of a lease, hire or licence, is a long-term lease.

The premises are not commercial residential premises as they are not similar to a hotel, motel, inn, boarding house or hostel as outlined in Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises.

Residential premises is defined in section 195-1 as:

Residential premises means lands or a building:

(a)          is occupied as a residence or for residential accommodation; or

(b)          is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation;

(regardless of the term of occupation or intended occupation) ...

Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises considers how section 40-35 of the GST Act (residential rent) applies to supplies of residential premises.

In relation to premises not occupied at the time of the supply, paragraph 7 and 8 of GSTR 2012/5 states:

7. Premises, comprising land or building, are also residential premises under paragraph (b) of the definition of residential premises if the premises are intended to be occupied, and are capable of being occupied, as a residence or for residential accommodation, regardless of the term of the intended occupation. This limb of the definition refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the premises.

8. A supply of residential premises may consist of a single room or apartment, or a larger complex consisting of rooms or apartments.

The requirement in section 40-35 that the premises are to be used predominately for residential accommodation is interpreted as a single test that looks to the physical characteristics of the property to determine the premises' suitability and capability for residential accommodation.

To satisfy the definition of residential premises, premises must provide shelter and basic living facilities. Premises that do not have the physical characteristics to provide these are not residential premises to be used predominately for residential accommodation. The premises must also be fit for human habitation. An objective consideration of the relevant facts and circumstances determines whether residential premises are fit for human habitation.

The Property does provide shelter and basic living facilities and are fit for human habitation. Therefore, the Property satisfies the definition of 'residential premises' in section 195-1.

However, not all premises that possess basic living facilities are residential premises 'to be used predominately for residential accommodation.' Paragraph 25 of GSTR 2012/5 states:

... if it is clear from the physical characteristics of the premises that their suitability for living accommodation is ancillary to the premises' prevailing function, the premises are not residential premises to be used predominately for residential accommodation.

Examples of premises where physical characteristics of the premises indicate it is not residential premises to be used predominately for residential accommodation are outlined in paragraph 26 to 39 of GSTR 2012/5:

•                     office buildings - the physical characteristics indicate that the premises are a place for office workers to undertake tasks associated with a business.

•                     private hospital - the physical characteristics indicate that the premises are a place where the sick or injured are given medical or surgical treatment.

•                     residential care facility (low care hostel and nursing home) - the physical characteristics evidence that the premises are to be used predominately to provide care to the frail and disabled.

•                     shop - the characteristics and design plans show that the building is a shop designed to facilitate retail business.

While the premises above may provide shelter and basic living facilities, the physical characteristics evidence that they are a different type of premises. In contrast, paragraphs 44 to 45 of GSTR 2012/5 illustrate that the addition of furniture or minor fittings is not sufficient to modify the physical characteristics of residential premises into premises other than residential premises to be used predominately for residential accommodation. In that example, the installation of an electricity point and telephone line and addition of shelves, filing cabinets, desk, office chairs, office suitable carpet and signage to facilitate part of a house being used as an office are not sufficient modifications and the premises remain residential premises to be used predominately for residential accommodation.

In your case, the Property will have bathrooms, bedrooms, a kitchen, a living area, a laundry room, a garage and driveway, a rainwater tank, a hydrotherapy room, side and rear fencing, entry features (such as verandas, porches, porticos and balconies), and a front garden. These physical characteristics are those of residential premises.

It is also acknowledged that the Property is to be built as a Class 3 Building under the National Construction Code and works need to be done to comply with the requirements by the National Construction Code. However, despite these works, which might have enhanced the Property in a few aspects (safety, convenience etc), they have not changed the physical characteristics of the Property into a different type of premises. The floorplan of the Property also supports this in that the overall settings of the Property are not substantially different from a typical residential house.

Based on the physical characteristics of the Property, we consider the prevailing function is residential premises to be used predominately for residential accommodation. The property is not a care facility. The additional modifications to the Property and support provided to the NDIS participant support them to live in the residential premises independently.

The supply being made under the head lease to the SDA provider will therefore considered input taxed as it is a supply of residential premises under section 40-35. Consequently, you will construct the Property for the purpose of making supplies that are not taxable supplies pursuant to section 9-5 of the GST Act.

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