Edited version of private ruling

Authorisation Number: 1011753441730

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Ruling

Subject: GST treatment of community care services

Question

Are the supplies of the following services provided to the elderly or disabled GST-free under subdivision 38-B of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

(a) the preparation of meals; (b) social stimulation events; (c) speech/reading therapy (d) daily exercise regimes and (e) the management of their medication.

Answer

(a) The preparation of meals is subject to GST.

(b) Social stimulation events will be taxable in certain circumstances.

(c) Speech/reading therapy will be GST-free.

(d) Daily exercise regimes will be taxable under certain circumstances.

(e) The management of the clients medication will be GST-free in certain circumstances.

Relevant facts

You carry on an enterprise and are registered for GST.

Consideration for your services is received directly from the clients that receive no government subsidy.

You intend to obtain from the client's general practitioner a recommendation as to the type of services appropriate for the treatment of the client's medical condition and well-being.

A detailed care plan will be created by a registered nurse that addresses the needs of the client. This will include the areas of diet/eating, social intercourse, communication issues, exercise and strategies/management of medication. You expand on these broad categories in the following manner:

Diet/Eating

Assisting to eat is provided as well as the preparation of the client's meal.

Social Intercourse

If as part of the care plan or as directed by the client, there is a need for social intercourse you will provide a carer for a minimum of 4 hours who will also address issues such as dressing, moving, walking and communication. The social intercourse is merely a consequence and not the intent of the services provided. An example provided is for a carer being in attendance for the client to see a concert, church, a drive, visiting relatives or friends, shopping and time in cafes.

Speech/Reading therapy

This will be provided if it is included in the individual's care plan as being appropriate for their medical needs.

Exercise

If the care plan deems it appropriate for the client to participate in an exercise regime then it follows it is necessary to address their medical needs.

Medication

If the client does not have the capacity to self administer medication to address their condition, then the carer will perform that function. Your primary role will be to remind the client that the medication is due and needs to be taken. The secondary role is to assist in the expelling of the medication from the blister packs.

You will provide 24 hour care, 12 hour care, sleepover care and morning/evening care in accordance with the client's directions and their medical needs.

Services such as domestic assistance and transport will not be provided.

Summary

Supplies of community care will be GST-free if they are of the type covered under Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles (Item 2.1). Based on the facts provided we find that:

(a) the preparation of meals is subject to GST
(b) social stimulation events will be subject to GST in certain circumstances
(c) speech/reading therapy will be GST-free
(d) daily exercise regimes will be subject to GST under certain circumstances
(e) the management of the client's medication will be subject to GST in certain circumstances.

Detailed reasoning

In considering whether supplies of community/attendant care services are subject to GST, section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) must be considered. This section of the GST Act states:

 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.

Where all the elements of section 9-5 of the GST Act are satisfied, the supplier is liable to remit GST on supplies made, unless they are GST-free or input taxed.

Subdivision 38-B of the GST Act sets out the requirements for a supply relating to Health to be GST-free.

Community care is GST-free when section 38-30 of the GST Act is satisfied. This section of the GST Act states:

(1) A supply of community care is GST-free if a community care subsidy is payable
under Part 3-2 of the Aged Care Act 1997 to the supplier for the care;

(2) A supply of care is GST-free if the supplier receives funding under the Home and
Community Care Act 1985 in connection with the supply;

(3) A supply of community care is GST-free if the supply is of services:

(a) that are provided to one or more aged or disabled people; and that

(b) 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; or

(4) A supply of care is GST-free if:

(a) the supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply and

(b) that are of a kind determined in writing by the Aged Care Minister to be similar to a supply that is GST-free because of subsection (2).

Where a supplier does not receive any government funding, any supplies of community care made will be GST-free if subsection 38-30(3) of the GST Act is met.

'Community care' is defined in section 195-1of the GST Act as having 'the meaning given by section 45-3 of the Aged Care Act 1997, which in turn states:

(1) Community 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.

(2) The Community Care Subsidy Principles (the Principles) may specify care that:

(a) constitutes community care for the purposes of this Act; or

(b) does not constitute community care for the purposes of this Act.

Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles contains the following wording:

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

(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; and

(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 descriptions itemised in Item 2.1 are fairly generic and therefore, the Tax Office considers the use of the expression 'of a kind' does not really provide scope for expanding those descriptions. Consequently, it is only these specific services, where provided to an aged or disabled person, that are GST-free under this subsection.

By way of example, the Tax Office considers that the following services are covered by Item 2.1:

Bathing and showering the patient and assisting the patient to bath and shower themselves;

Brushing the patient's teeth and assisting the patient to brush their own teeth;

Brushing the patient's hair or assisting the patient to brush their hair, but not hairdressing services;

Continence management and cleaning up after a patient accident;

Assisting the patient to use aids and appliances designed to assist continence management;

Feeding the patient and assisting the patient to feed themselves, including the cutting up of the meal, but not the preparation of the meal;

Assisting the patient in using eating aids,

Dressing and undressing the patient and assisting the patient to dress and undress themselves;

Assisting the patient to use dressing aids;

Assisting the patient to be mobile, for example, by steadying the patient while they walk around;

Pushing a patient while in a wheelchair and assisting a patient while they use their wheelchair;

Assisting patients in using other devices and appliances designed to aid mobility;

Fitting of artificial limbs and other personal mobility aids;

Assisting the patient to communicate, for example, by assisting them to write a letter or by acting as a translator for the patient;

Assistance with and fitting sensory communication aids;

Checking hearing aid batteries and cleaning spectacles; and

Supervision and attendance at prescribed activities with the claimant, for example, medical and therapy appointments, rehabilitation activities and social and community activities, for the purpose of providing services of a kind covered by Item 2.1.

Time spent not actively caring for the claimant, but simply being there to provide services of a kind covered by Item 2.1 as the claimant requires, will also be GST-free.

However, the following services are not considered to be covered by Item 2.1:

Meal preparation services;

Monitoring Medication;

Personal administration;

Undertaking the patients shopping without the patient present;

Provision of travel services;

Domestic chores and gardening services;

Provision of and participation in rehabilitation services;

Provision of and participation in social and community activities including Adult Day Care Services comprising of craft based activities geared towards socialisation of participants.

The entering into an obligation or the making of a promise to a third party to provide services covered by Item 2.1.

You have advised that you provide the following services to the elderly - (a) the preparation of meals (b) social stimulation events (c) speech/reading therapy (d) daily exercise regimes and (e) the management of the client's medication. Our decision as to whether the supplies of these services will be GST-free is listed below:

(a) The preparation of meals

Food preparation services undertaken to prepare meals for claimants and medication monitoring services are not services of a kind covered by Item 2.1. They are not GST-free under subsection 38-30(3) of the GST Act and as such will be taxable.

(b) Social stimulation events

Supervision and attendance at community and social activities to be available to provide services of personal assistance which are similar in nature to those listed in paragraphs (a) to (f) of Item 2.1 will be GST-free. However, the provision of social and community activities aimed at returning the claimant to full physical strength and independence are not services of a kind of personal assistance services and will be taxable.

For example, assisting a client to play lawn bowls by standing beside them and steadying them while they roll the bowls and then collect the bowls at the end of the game will be GST-free. However, where the attendant carer is not simply assisting the claimant to play, but is engaging in a game of lawn bowls with the claimant, the supply will be taxable.

(c) Speech/reading therapy

This activity is covered by Item 2.1 and is therefore GST-free.

(d) Daily exercise regimes

If the service provided is to encourage clients to be physically active, then this is not covered by the relevant Quality of Care Principles and will be taxable. If however you assist clients to physically move while they exercise, then this will be a GST-free supply.

(e) The management of a client's medication

You advised that your primary role is to remind the client that their medication is due. This activity falls under the category of the monitoring of medication which is subject to GST.

Your secondary role is to assist those clients that do not have the capacity to self administer their medication. This activity is GST-free as it is similar to feeding a disabled client.

Mixed supplies

Goods and Services Tax Ruling GSTR 2001/8 covers the apportionment of consideration for a supply that includes taxable and non-taxable parts. Paragraph 12 of GSTR 2001/8 states that where a supply is made that is a combination of separately identifiable taxable and non-taxable parts, you need to identify the taxable part of the supply. Then you can apportion the consideration for the supply and work out the GST payable on the taxable part of the supply.

Paragraph 29 of GSTR 2001/8 states:

To work out the value of the taxable part of a mixed supply, you identify the parts of the supply and apportion the consideration to each of the parts. The value of the taxable part is 10/11 of the consideration for the taxable part, and the GST payable is equivalent to 1/11 of that consideration.

Example 16 from GSTR 2001/8 provides an example of how to apportion the consideration for a mixed supply:

105. Under direction from a doctor, Gilda provides community care to a privately funded client in the client's own home. She charges a flat hourly rate for her services that include helping to feed and dress her client. These services are GST-free under section 38 - 30. Gilda also tidies her client's house and garden. These latter services are taxable. Gilda apportions the consideration for her services on the number of hours it takes for her to perform the services. This is a reasonable method of apportionment.

Summary

Where a supplier is engaged by an aged or disabled client to provide them with services that are of a kind covered in Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles, then those services will be GST-free. Conversely, where a supplier provides services that are not covered in Item 2.1, the supply will be taxable and GST will apply.