Edited version of private ruling

Authorisation Number: 1011667065195

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and supply of child care services

Question 1

Are you making a taxable supply for which you receive an enrolment fee from parents to be a member of the Family Day Care Scheme and to register with you for the provision of child care services?

Answer: Yes.

You are making a taxable supply where you receive an enrolment fee from parents to be a member of the Family Day Care Scheme and to register with you for the provision of child care services. The enrolment fee is subject to GST.

Question 2

Are you making a taxable supply for which you receive an enrolment fee from home based educators (carers) to register with you to receive the orientation, policy and procedure manuals, templates and other forms relating to their work?

Answer: Yes.

You are making a taxable supply where you receive an enrolment fee from carers to register with you to receive the orientation, policy and procedure manuals, templates and other forms relating to their work. The enrolment fee is subject to GST.

Relevant facts

You are a Family Day Care Scheme registered for goods and services tax (GST).

You are a central co-ordinating unit for childcare services.

You are an administrator of carers.

You charge family/parents a membership fee which entitles the parent to be a member of the Family Day Care Scheme and to register with you for the provision of child care services.

You also charge new home based educators (carers) who are self-employed an enrolment fee to register with you. This fee includes an orientation, policy and procedure manual, templates and other forms relating to their work.

Reasons for decision

Question 1 & 2

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.

A supply of goods is a taxable supply if all the requirements of section 9-5 of the GST Act are met. Under section 9-5 of the GST Act you make a taxable supply if:

(a) you make the supply for consideration; and

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

(c) the supply is connected with Australia; and

(d) 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.

For the supplies for which you receive enrolment fees from both the parents and the carers to be taxable supplies, all the requirements listed in section 9-5 of the GST Act must be satisfied.

From the facts provided, you make these supplies for consideration, the supplies are made in the course of your enterprise, the supplies are made in Australia and you are registered for GST. All the requirements in paragraph 9-5(a) to 9-5(d) of the GST Act are thus satisfied.

Your supplies are not input taxed under Division 40 of the GST Act. Therefore, what remains to be considered is whether your supplies are GST-free.

Section 38-140 of the GST Act provides that child care services are GST-free if the childcare supplier is a registered carer or an approved child care service (section 38-145 of the GST Act). The term 'registered carer' and 'approved child care service' are defined in section 3 of the A New Tax System (Family Assistance) (Administration) Act 1999. Paragraph (b) of the definition of an 'approved child care service' includes an approved family day care service.

A supply of child care is GST-free where the supplier of the child care is eligible for funding from the Commonwealth under guidelines made by the Child Care Minister that relate to the funding of family day care (section 38-150 of the GST Act).

Section 38-155 of the GST Act provides that a supply is GST-free if it is a supply that is directly related to child care that is:

· GST-free supply because of section 38-140, 38-145 or 38-150 of the GST Act and

· it is supplied by, or on behalf of, the supplier of the child care.

Goods and Services Tax Determination GSTD 2001/1 discusses, amongst other things, the GST treatment of the administration levy paid by parents and carers to a Family Day Care Scheme.

Administration levy charged to the parents

Paragraphs 9 to 10 of GSTD 2001/1 state:

9. The administration levy charged to the parents enables the Family Day Care Scheme to provide services that are directly related to the supply of GST-free child care. Therefore, the levy charged by the central coordination unit to the parents is consideration for a GST-free supply.

10. If the administration levy consists of a charge or charges that are not directly related to the supply of GST-free child care, then those components of the levy must be apportioned and are subject to GST. For example, if part of the levy represents a membership fee which entitles the parent to be a member of the Family Day Care Scheme that membership fee is taxable.

You are a coordinating unit who resources carers, arranges the placement of children, monitors the care provided and undertakes the necessary administrative responsibilities. You charge parents an enrolment fee to become a member of the Family Day Care Scheme and to register with you for the provision of child care services. In this instance the fee you charge represents a membership fee which entitles the parent to be a member of the Family Day Care Scheme. This enrolment fee is not directly related to the supply of child care. As such, the supply for which you receive an enrolment fee from the parents does not meet the GST-free requirements listed in section 38-155 of the GST Act. The supply is therefore a taxable supply and is subject to GST.

Administration levy charged to the Carers

Paragraphs 11 to 12 of the Determination state:

11. The administration levy charged to the Family Day Care Carers enables the administrator of the Family Day Care Scheme to provide services that are directly related to the supply of GST-free child care. This levy is also GST-free.

12. To the extent that the levy consists of charges for services, which are not directly related to the supply of GST-free child care, the levy will be taxable. For example if the levy consists of components relating to the registration or training of the carer those components of the levy are taxable.

You charge the carers an enrolment fee for orientation, policy and procedure manual, templates and other forms relating to their work. In this instance, this fee is not directly related to the supply of GST-free child care. Therefore the supply for which you receive an enrolment fee from the carers does not meet the GST-free requirements listed in section 38-155 of the GST Act. The supply is therefore a taxable supply and is subject to GST.