Edited version of your private ruling

Authorisation Number: 1012003741759

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Ruling

Subject: GST and the supply of services and accommodation

Questions

Is the supply of services made by you to Qualifying Residents of a property situated at a specified address (the Property) GST-free under section 38-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Note: Qualifying Residents refer to the class of residents whom a Service Apartment Care Assessment form is prepared and completed by a medical practitioner certifying which services are needed by and provided to on a continuous basis.

Is the supply of accommodation made by you to Qualifying Residents of the Property GST-free under section 38-25 of the GST Act?

Answers

No, the supply of services made by you to Qualifying Residents of the Property is not GST-free under section 38-25 of the GST Act.

No, the supply of accommodation made by you to Qualifying Residents of the Property is not GST-free under section 38-25 of the GST Act.

Relevant facts and circumstances

You are seeking a GST private ruling from the Commissioner of Taxation (the Commissioner) in relation to the GST treatment of supply of accommodation and services such as meals and laundry to residents in a retirement village under section 38-25 of the GST Act.

Your submission included the following facts and contentions:

Facts/contentions provided by you/your tax agent:

You registered for GST from 2009.

You are the owner and scheme operator of the Property.

The Property forms part of the Retirement Village Scheme that is managed by a specified entity.

You do not receive any government funding in relation to your supplies to residents of your retirement village.

Under the Residential Licence Agreement, you agree to provide General Services that include:

o Management and administration

o Gardening and minor maintenance

o Recreation or entertainment facilities

In addition Personal Services are provided (at extra cost) which comprise of food and laundry services.

Other services that are available on site include:

o Medication prompt/assistance

o Continence management

o Nursing general

o Physiotherapy

The accommodation is limited to people who are over 55 years of age.

The physical characteristics of the complex includes the following features:

o The site is flat with covered walkways suitable for wheelchairs and gurneys

o Each unit has no cooking facilities and meals are either provided in rooms or the communal dining room

o Each unit is designed for elderly residents with low light switches, grab rails, flat surfaces, raised toilets and emergency systems

o The sketch plan and pictures supplied show the kitchen to have a bench top with cupboards underneath and a sink a fridge and a microwave.

The site layout plan you provide indicates that the complex consists of a number of units in separate buildings each with a number of apartments set out in a single row which are only accessible via an external door. The units do not show a common corridor or internal passageways. (Note: An aerial view accessed from internet map indicates the walkways as connecting one building to another building next to it).

A Serviced Apartment Care Assessment form is prepared and completed by a medical practitioner certifying which services are needed and provided to a class of residents on a continuous basis (Qualifying Residents).

The Qualifying Residents have a continuing need for services outlined under items 2.1 and 3.9, and a written instrument is in place which includes:

o The type of care services agreed to be provided and the charges applicable to those services

o The type of other services agreed to be provided and the charges applicable to those services

o You made an analysis of the services and accommodation supplied. Your analysis includes the following:

o Under your Public Information Document (PID) created for the purposes of the Retirement Village Act 1999, residents on the Property are limited to those aged 65 years and above. (You have provided a copy of the PID).

o In accordance with the Resident Licence Agreement you also understand that all of the residents on the Property are provided with daily meals and laundry.

o As evidenced by Annexure 1- Layout of Unit and Village of the PID, the serviced apartments are located in a complex with a common linking corridor in the form of covered walkways. You note the complex does not merely consist of a row house; instead, it is a complex that has been designed to have the physical characteristics of serviced apartments. In particular, you note that a single row house would not have a common linking corridor, a feature that is present on the Property.

o In addition, the communal dining facilities are available to residents and the manager on-site is a registered nurse who has first aid training and is on 24 hour call at the Property. The Property is designed for use by aged residents who may require the full range of daily living activities assistance or nursing services.

o Under the Resident Licence Agreement, you provide General Services and Personal Services to all residents. These services (as defined in further details in the PID) are listed in Schedule 1. In order for the services to be GST-free they must be provided to Qualifying Residents who have a continuing need for some or all of the services specifically listed in items 2.1 or 3.8.

o The General Services and Personal Services provided to all residents under the Resident Licence Agreement do not include services listed in items 2.1 or 3.8. However, subject to assessment by the medical practitioner, the services are available and provided to Qualifying Residents. To this end you note that though the services are arranged by you for them to be provided to Qualifying Residents via a third party, they remain part of the services package that would be provided under the Resident Licence Agreement.

o Based on your analysis you submit that:

· the services supplied to Qualifying Residents should be treated as GST-free under subsection 38-25(3) of the GST Act, and

· the supply of accommodation to Qualifying Residents should be treated as GST-free under subsection 38-25(4) of the GST Act.

The PID includes the following information:

Part 2 - Village and Accommodation Information

Village Details

· The name of the retirement village is specified. (clause 2.1)

· The retirement village is situated at a specified address. (clause 2.2)

· The land the retirement village is on is owned by you. (clause 2.4)

· Management of the village operations is the responsibility of the specified entity. (clause 2.5)

Facilities Details

· The scheme operator will provide existing facilities to residents that include a community room comprising a dining area, general community/activity area, library, bar, toilet and separate room for visiting service providers , for example a hair dresser. (clause 2.8)

Age limitations

· The age limit applicable to this retirement village scheme is a minimum age of 65 years. (clause 2.10)

Accommodation Details

Clause 2.11 and 2.12 provide that the retirement village has a specified number of serviced apartments provided under licence. (However see Clause 3.5 below)

Part 3 - Your Accommodation Unit Details

Accommodation Unit Details

· The accommodation units available are set out as 'independent living unit' as shown by a border around the words 'an independent living unit'. The other option, 'a serviced apartment' is not shown with a border around the words. (clause 3.5)

· The tenure that residents will receive in their accommodation unit is by licence as selected by a border around the word 'licence'. The other options are not shown with a border around the words. (clause 3.6)

· Fixtures, fittings and furnishings provided in the accommodation unit include a microwave, refrigerator, air conditioner and floor coverings, 2 fans, blinds and curtains. (clause 3.8)

Fees and Charges

· Residents are required to pay fees to the scheme operator in the form of a General Services Charge (which includes a Maintenance Reserve Fund contribution). Residents may also be required to pay a Personal Services Charge should they elect to accept any personal services which may be on offer from time to time. (clause 3.16)

General Services Charge

· General Services provided with accommodation units include: management and administration, gardening and minor maintenance, recreation or entertainment facilities. (clause 3.17)

· General Services Charges do not include charges for individual services such as laundry and meals and cleaning of accommodation units. (clause 3.18)

Personal Services charges

· Personal services selected include: the provision of two single sheets, a pillowcase and a bath towel (the linen) properly laundered weekly. The provision of the following meals daily:

(a) Continental style breakfast,

(b) Cooked lunch, and

(c) Light dinner. (clause 3.20)

Part 5 - General Information for this Village

Chapter 2- Residents' Contributions Information

· Residents in the village are required to pay fees to the scheme operator in the form of a general services charge. Residents may also wish to obtain additional personal services by paying a personal services charge. (clause 5.2.1)

· General services provided include:

o management and administration

o gardening and minor maintenance

o recreation or entertainment facilities.

The provision of two single sheets, a pillowcase (the linen) and a bath towel properly laundered weekly. The Resident may elect to use his/her own linen from time to time during the term of the Licence and the scheme operator must launder that linen weekly.

The provision of the following meals daily:

o Continental style breakfast,

o Cooked lunch, and

o Light dinner (clause 5.2.2)

General Services Charges do include charges for individual services such as laundry and meals. They do not include charges for cleaning accommodation units. (clause 5.2.3)

Personal services provided include:

o Weekly linen service

o Three meals each day (clause 5.2.5).

The Personal Service Charge is currently a specified amount per resident per fortnight and is calculated by taking the budgeted estimate for the total food acquisition together with budgeted laundry costs and applying the specified formula:

The Personal Service Charge is calculated using the formula.

Chapter 6 - Annexures

Annexure 1- Layout of Unit and Village

· The layout of the village includes:

o A community building - two storey with manager's residence

o A specified number of separate rows of standard units (each row comprising a specified number of standard units). The rows of units are dispersed through the grounds of the property

o A specified number of rows of access units

o Car park for cars, SRV plus ambulance

o Carports

o A Gazebo

o Service courtyard

o Managers store, entry gatehouse, refuse enclosure

o A garden shed

· The unit floor plans show the floor plan of the following units:

o Standard Units (Approx. specified m²) for:

o Corner units

o Straight through units

o Larger units (Approx specified m²)

All units shown have a living/dining room, bath/laundry, kitchen and bedroom.

The corner units have an extra window and the larger units have a courtyard.

Annexure 2 - Services Covered by General Services Charge

· Fortnightly Levy Contribution

If the resident elects to take the Personal Services currently on offer (3 daily meals and laundered linen) then there will be additional fortnightly charge of the specified amount payable from when the resident commences his or her residency.

Annexure 4 - Residential Licence Agreement

Residential Licence

Reference schedule

· Licensor: You with your ACN specified (clause 3(a))

· Clause 3(d) contains a Services Schedule which codes services as follows:

I = included in service fee

O= optional services some of which are not currently offered but may be offered from time to time at the additional fee to be supplied by the village manager.

A = available on site by arrangement between the residents and a third party supplier of such services.

Some of the services and their respective codes are extracted below:

Definitions (clause 2.1)

· General Services Charges means all costs incurred by the Scheme Operator in the operation of the Village including: (itemises in a list from (a) to (u) expenses such as rates, taxes, insurance, day to day maintenance, operational costs etc.)

· Personal Services Charges means all costs incurred by the Scheme Operator to provide optional services for the benefit, care or enjoyment of a resident and includes the following-

(a) all costs of providing the following meals daily:

1. continental style breakfast,

2. Cooked lunch, and

3. Light dinner -evening meal freshly prepared onsite.

(b) all costs of providing two single sheets, a pillow case ("the linen") and a bath towel per resident properly laundered weekly...

Scheme Operator for the purpose of this licence means the entity named as licensor in the reference Schedule hereto;

What can the Scheme Operator do?

· Access Care Requirements (clause 4.13)

(a) The Scheme Operator may require the Resident to undergo an assessment of the Resident's care needs to ensure that the Unit remains suitable as a principal place of residence for the Resident…

· Health (Clause 5.6)

1. The Resident must notify the Scheme Operator if:

(a) The Resident's physical, psychological or any other medical condition affects the Resident's ability to care for himself or herself independently…

Annexure 10 - Certificate of Registration

Certificate of Registration as a Retirement Village Scheme

The Property located at the specified address and operated by you with your specified ACN was registered as a Retirement Village Scheme on a specified date under the Retirement Villages Act 1999 of the specified State.

In subsequent communications you stated the following:

Whilst the PID identifies meals and laundry services as optional in several parts, all of the residents take the optional package; that it is your policy that residents are only able to enter the village if they require those services. However, the PID or Residence Licence Agreement does not contain the policy that 'residents are only able to enter the village if they require those services'.

Relevant legislative provisions

The a New Tax System (Goods and Services Tax) Act 1999 38-25

Reasons for decision

Note: In the reasons for decision below:

All legislative references in this ruling are to the GST Act, unless otherwise specified

All ATO reference material referred to in this ruling are available on the ATO website www.ato.gov.au

Question 1:

Is your supply of services such as the provision of meals and laundry to Qualifying Residents of the Villas GST-free under section 38-25 of the GST Act?

You considered that in accordance with your analysis, your supply of services to Qualifying Residents should be treated as GST-free under section 38-25(3).

Subsection 38-25(3) provides that a supply of services is GST-free if:

· the services are provided to one or more aged or disabled people in a residential setting

· the Aged Care Minister has determined in writing that the services are of a kind covered by Schedule 1 to the Quality of Care Principles, and

· the services include, and are only provided to people who require, the services (care services) set out in:

· item 2.1 (daily living activities assistance) of Part 2 of that Schedule, or

· item 3.8 (nursing services) of Part 3 of that Schedule.

We accept that your services are provided to aged or disabled people and therefore we will look at the meaning of the terms 'residential setting' and 'retirement village' for GST purposes.

Residential setting

With respect to the requirement in paragraph 38-25(3)(a), it is necessary that the services are provided to one or more aged or disabled persons in a 'residential setting'.

The term 'residential setting' is not defined in the GST Act. However, subsection 38-25(3A) provides that services provided to a resident of a retirement village are taken, for the purposes of paragraph 38-25(3)(a), to be provided in a 'residential setting' if, and only if:

· he or she is a resident of a serviced apartment in the retirement village, and

· there is in force a written agreement under which the operator of the retirement village provides daily meals and heavy laundry services to all of the residents of the apartment.

In considering the term 'residential setting' the meaning of the term 'retirement village' and 'serviced apartment' is required.

Retirement village

The definition of retirement village in section 195-1 contains the following requirements:

· the premises are residential premises,

· accommodation in the premises is intended to be for persons who are at least 55 years old, or who are a certain age that is more than 55 years, and

· the premises include communal facilities for use by the residents of the premises,

· but the following are not retirement villages:

o premises used, or intended to be used, for the provision of residential care (within the meaning of the Aged Care Act 1997) by an approved provider (within the meaning of that Act), and

o commercial residential premises.

Serviced apartment

The term 'serviced apartment' is defined in section 195-1.

The ATO issued a number of publications to provide guidelines that included the requirements to satisfy the definition of a 'serviced apartment.' For example, fact sheets 'GST and serviced apartments in retirement villages' (NAT 12761) and GST and property (NAT 72957) summarise and explain that an apartment is a 'serviced apartment' in relation to a retirement village if:

The apartment is designed to be occupied by aged residents who require the full range of:

o the services set out in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles, or

o the services set out in item 3.8 (nursing services) of Part 3 of that Schedule

o even if an individual resident does not require all of the above services.

o at least one responsible person is continuously:

o on call to provide emergency assistance to residents of the apartment, and

o in reasonable proximity to the apartment.

This means that a responsible person will be available to provide first aid or to arrange other mobility, nursing or medical assistance to the residents.

o the apartment is part of a single complex of apartment and is accessible from a common corridor (which may or may not contain lifts) linking the apartment to the other apartments in the complex, and

o there is a communal dining facility within the retirement village that is available for use by the residents.

However, a serviced apartment does not include a detached house, a row house, a terrace house, a town house, a villa unit or an independent living unit.

Is it a retirement village for GST purposes?

Draft Goods and Services Tax Ruling GSTR 2011/D5, Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels (GSTR 2001/D5) includes guidance in relation to retirement villages.

GSTR 2011/D5 is a draft ruling and represents the Commissioner's preliminary view about the way in which a relevant taxation provision applies.

GSTR 2011/D5 includes the following guidelines:

19. Retirement villages governed by the retirement village legislation applicable in the state or territory⁴ where they are located are residential premises,⁵ and satisfy paragraph (a) of the definition of retirement village in section 195-1.

20. It is a question of fact, determined by the entry requirements of a particular complex or facility, whether premises are intended for persons of at least 55 years of age as required by paragraph (b) of the definition of retirement village in section 195-1.

21. Communal facilities referred to in paragraph (c) of the definition of retirement village in section 195-1 include the following types of facilities located within a retirement village complex: a library, a dining room, a recreation room, a chapel, a gymnasium, and outdoor recreational and leisure facilities such as a tennis court, a swimming pool or a barbeque area.⁶ Communal facilities do not include reception areas, pathways, gardens, driveways and landscaping.⁷

...

23. A retirement village that is covered by the retirement village legislation applicable in the state or territory where it is located is not commercial residential premises⁸ and is not excluded from being a retirement village by paragraph (e) of the definition of retirement village in section 195-1.

The Property was registered as a Retirement Village Scheme on the specified date under the Retirement Villages Act 1999 of the specified State as evidenced by the Certificate of Registration.

The PID documents that the accommodation is limited to those aged at least 65 years. You submit that the majority of the residents are well above this age.

The PID states that you will provide existing facilities to residents that include a community room comprising 'dining area, general community/activity area, library, bar, toilet and separate room for visiting service providers, for example a hair dresser'.

Accordingly, the Property satisfies the definition of a retirement village for GST purposes.

Are the units in the Villas serviced apartments?

GSTR 2011/D5 states:

34. that serviced apartments in retirement villages share many features and characteristics that are also common to other types of accommodation provided in retirement villages, including independent living units and self-care units. Independent living units and self-care units are designed for people who are capable of living independently and do not require daily living activities assistance or nursing services, as set out in items 2.1 and 3.8 of Schedule 1 to the Quality of Care Principles. Independent living units and self-care units are not serviced apartments as defined in section 195-1.

35. Any one factor on its own is not conclusive. However, the following characteristics indicate that an apartment is designed for a person who requires item 2.1 services, item 3.8 services, or a combination of both services, as required by paragraph (a) of the definition of serviced apartment in section 195-1:

o fixtures and fittings consistent with a person who requires daily living activities assistance or nursing services, for example, bathroom hand rails, grab rails, wheelchair ramps, and wide doorways that allow for wheelchair access;

o a smaller physical layout than other styles of accommodation in a retirement village, for example, a one room studio style apartment or an apartment with no or only limited cooking facilities, comprising only one or two bedrooms and a separate living area;

o any self-catering facilities are limited, for example, a small kitchenette with a microwave and bar fridge;

o no laundry, or only limited self-laundry facilities.

The PID provides the unit floor plans for the standard units and the larger units. The corner units and the straight through units are shown for both the standard and larger units.

The floor area of the standard units is approximately of the specified square meters. The corner and straight through units are identical in the floor plan other than the corner unit having an additional window.

The floor plan of the standard units comprises one bedroom, a living/dinning area, a kitchen and a bathroom/laundry.

The specified number of larger units is shown in a row next to each other. They are all in the same building. Their floor area is approximately of the specified square meters. These units are also of one bedroom, a living/dining area, a kitchen and a bathroom/laundry.

The sketch plan and pictures provided show the kitchen to have a bench top with a sink and cupboards underneath with a space for the fridge. The pictures that you subsequently provided show the bench top with the sink and cupboards below, with a microwave and a fridge.

You submit that each unit is designed for elderly residents with low light switches, grab rails, flat surfaces, raised toilets and emergency systems with no cooking facilities and meals are either provided in rooms or the communal dining room.

Although one factor on its own is not conclusive as stated in paragraph 35 of GSTR 2011/D5, the size and physical characteristics of the units in the Property as shown on the PID together with your above statement may point towards the units being designed for a person who requires some of the care services in item 2.1 and 3.8 of Schedule 1.

The definition of serviced apartment also requires that you have at least one responsible person who is continuously on call to provide emergency assistance to residence of the apartment and who is in close proximity to the apartment and available to provide first aid or to arrange mobility, nursing or medical assistance to the residents.

You advised that the on-site manager is a registered nurse who has first aid training and is on 24 hour call at the Village. Accordingly, this requirement is met.

Serviced apartment also requires that there is a communal dining facility within the retirement village that is available for use by residents.

The PID states that you will provide existing facilities to residents that include a community room comprising a dining area and other facilities. Accordingly, we consider this part of the definition of 'serviced apartment' is also satisfied.

Paragraph (c) of the definition of serviced apartment requires that the apartment is part of a single complex of apartments and is accessible from a common corridor (which may or may not contain lifts) linking the apartment to the other apartments in the complex.

ATO Interpretative Decision ATO ID 2006/111 addresses the issue of whether pathways and roads in a retirement village are 'corridors' for the purposes of paragraph (c) of the definition of 'serviced apartment' in the GST Act. The factual circumstances outlined in the ATO ID are:

o the Village consists of a number of apartments in small groups with each group under a single roof;

o each apartment is accessible from an external door, and has pathways and/or roads around it;

o the apartments are not accessible to each other from within the building.

The ATO ID refers to the explanatory memorandum to the Tax Laws Amendment (Retirement Villages) Bill 2004 (EM) which confirms the policy intention in relation to 'corridor' and states at paragraph 1.31:

Serviced apartment accommodation is generally higher density accommodation than independent living units. Accordingly, serviced apartments must be part of a single complex of apartments that all meet the necessary conditions to qualify as serviced apartments. The serviced apartments need to be accessible from a common corridor (with or without linking lifts) connecting the apartment to the other apartments in that building.

The ATO ID concludes that the pathways and roads are not 'corridors' for the purposes of the definition of 'serviced apartment' in paragraph 38-25(3A)(a) of the GST Act as having regard to the EM, a corridor is a passage in a single building that connects an apartment to other apartments in that building. The ATO ID also concludes that a corridor would not include passages that connect an apartment to another apartment that is outside the building but part of the retirement village.

Paragraph 39 of GSTR 2011/D5 explains that a common corridor required by paragraph (c) of the definition of serviced apartment in section 195-1 includes internal passageways that connect all of the apartments in a single complex of apartments. A common corridor does not include covered or uncovered passageways that connect an apartment to another apartment that is outside of the building. It also does not include pathways and roads, including pathways and roads connecting groups of apartments with other groups of apartments, within the retirement village.

You submit the apartments are located in a complex with a common linking corridor in the form of covered walkways. You state the complex does not merely consist of a row house, that instead it is a complex that has been designed to have the physical characteristics of serviced apartments.

However, the site layout plan you provide indicates that the complex consists of the specified number of units in the specified number of separate buildings each with the specified number of apartments set out in a single row which are only accessible via an external door. That is, the units do not have a common corridor or internal passageways that connect all of the apartments in the single complex of those units.

An aerial view from internet map indicates the walkways as connecting one building to another building next to it.

Applying the principles outlined in ATO ID 2006/111, we consider that the premises fail to meet this requirement to satisfy the definition of 'serviced apartment.'

As all of the requirements of a serviced apartment are not satisfied, the units are not considered serviced apartments.

As additional information, we also note that you distinguish a serviced apartment from an independent living unit in part 3 of the PID. However, there are inconsistencies in the document. For example, under 'Your Accommodation Unit Details' at clause 3.5, the accommodation unit for the residents at the Property is 'An independent living unit' as indicated by a pre-circled selection. 'A serviced apartment' is not pre circled as the selection. Whereas, clauses 2.11 and 2.12 under 'Accommodation Details' the specified number of units are referred to as serviced apartments.

Is there in force a written agreement under which you provide daily meals and heavy laundry services to all of the residents of the apartment?

The below paragraphs of GSTR 2011/D5 states the following:

51. A supply of services to a resident of a serviced apartment in a retirement village is only taken to be provided in a residential setting for the purposes of paragraph 38-25(3)(a) if the operator of the retirement village, under a written agreement, provides daily meals and heavy laundry services to all of the residents of the serviced apartment.¹⁰

55. A separate written agreement or a specific provision in an accommodation agreement or residence contract that obligates the operator to provide daily meals and heavy laundry services to all the residents of a serviced apartment satisfies the requirement in paragraph 38-25(3A)(b) for there to be a written agreement.

56. An accommodation agreement or a residence contract merely stating that meals and heavy laundry services are available should the resident/s require them, or request them, does not satisfy the written agreement requirement in paragraph 38-25(3A)(b). This is the case even if there are agreed prices that apply if residents request meals. In these circumstances, services supplied to a resident of a serviced apartment in a retirement village are not taken to be provided in a residential setting and cannot be GST-free under subsection 38-25(3).

You submit that personal services are provided (at extra cost) which comprise food and laundry, and that in accordance with the Resident Licence Agreement, you understand that all of the residents on the property are provided with daily meals and laundry.

Clause 5.2.2 of the PID, which relates to general services provided, includes the provision that two single sheets, a pillow case and a bath towel to be properly laundered weekly. The clause also includes the provision of breakfast, lunch and dinner. Clause 5.2.3 states that General Service Charges do include charges for individual services such as laundry and meals, with emphasis on the word 'do'.

However, these provisions are contradictory to clause 3.18 which states that General Service Charges do not include charges for individual services such as laundry and meals and cleaning of accommodation, and with emphasis on the words 'do not'.

Inconsistency is also noted in other clauses of the PID. For example, under the services schedule of the Residential Licence Agreement, services that are included in the service fee are specifically marked out with the code 'I' and optional services provided at an additional fee are marked with the code 'O'. Resident meals and linen and laundry services relating to two single sheets, one pillow case and one bath towel are coded 'O' to indicate the services being optional, that may be offered for an additional fee.

In addition, meals and 'heavy laundry' services are referred to as optional under the definition of personal services charge. Also, clause 8.3 states that the residents may elect to have meals provided.

You subsequently advised that whilst the PID identifies meals and laundry services as optional in several parts, all of the residents take the optional package; that it is your policy that residents are only able to enter the village if they require those services. However, the PID or Residence Licence Agreement does not contain the policy that 'residents are only able to enter the village if they require those services'.

Given the above inconsistencies and that paragraph 38-25(3A)(b) specifically requires 'there is in force a written agreement' under which the operator of the retirement village provides daily meals and heavy laundry services to all residents of the apartment, the Commissioner is not satisfied you have demonstrated definitively that this condition is met, for the purpose of determining whether your services are provided in a residential setting under paragraph 38-25(3)(a).

Are you making a supply of services such as meals and laundry in a residential setting under paragraph 38-25(3)(a)?

As considered earlier in this ruling, the units in the Property are not serviced apartments and it is not definitive whether there is in force a written agreement under which you provide daily meals and heavy laundry services. Accordingly, the services you provide are not made in a residential setting.

Do the services you provide include, and are only provided to people who require, the care services set out in item 2.1 or 3.8 of Schedule 1 to the Quality of Care Principles (Schedule 1)under paragraph 38-25(3)(c)?

With respect to services set out in items 2.1 and 3.8 of Schedule 1, the Aged Care Minister has issued a determination: GST-free supply (Residential Care- Non-Government Funded Supplier Determination 2000 (Minister's Determination) which sets out the circumstances in which certain supplies are covered by Schedule 1.

Section 5 of the Minister's Determination sets out the circumstances as follows:

(a) the care recipient has a continuing need for some or all of the services listed in item 2.1 or 3.8 of Schedule 1, and

(b) the services are supplied under a written agreement with the supplier as a package made up of:

(c) the services mentioned in item 2.1 or 3.8 of Schedule 1

(d) other services mentioned in Schedule 1 that are needed by the care recipient, and

(e) accommodation, and

(f) the charges for services and for accommodation are payable to the same entity.

However, paragraph 71 of GSRT 2011/D5 explains that accommodation is not required to be included in a package of services supplied to residents of serviced apartments when a serviced apartment is supplied by way of lease, hire or licence, or by sale, or by acquisition of certain securities; and the other circumstances stated in subsection 38-25(4A) apply. In those cases, the written agreement required by the Minister's Determination only has to provide for a supply of a package of services.

The Fact Sheet sets out the evidentiary requirements in relation to a resident's continuing need for such services, which from 1 October 2007, includes a single one-off assessment when a medical practitioner completes the Serviced Apartment Care Assessment form.

You submit that the above form is 'prepared and completed by a medical practitioner certifying which services are needed and provided to a class of residents on a continuous basis ("Qualifying residents")'.

Another condition is that the services are supplied under a written agreement with the supplier as a package made up of some or all of the services listed in 2.1 or 3.8 of Schedule 1, and any other Schedule 1 services that are needed by the care recipient.

Item 2.1 of Schedule 1 lists daily living activities assistance as:

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

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.

g. Excludes hairdressing

Item 3.8 of Schedule 1 lists nursing services (care services for residents needing a high level of residential care) as:

Initial and on-going assessment, planning and management of care for residents, carried out by a registered nurse.

Nursing services carried out by a registered nurse, or other professional appropriate to the service (eg medical practitioner, stoma therapist, speech pathologist, physiotherapist or qualified practitioner from a palliative care team).

Services may include, but are not limited to, the following:

(a) establishment and supervision of a complex pain management or palliative care program, including monitoring and managing any side effects

(b) insertion, care and maintenance of tubes, including intravenous and naso-gastric tubes

(c) establishing and reviewing a catheter care program, including the insertion, removal and replacement of catheters

(d) establishing and reviewing a stoma care program

(e) complex wound management

(f) insertion of suppositories

(g) risk management procedures relating to acute or chronic infectious conditions

(h) special feeding for care recipients with dysphagia (difficulty of swallowing)

(i) suctioning of airways

(j) tracheostomy care

(k) enema administration

(l) oxygen therapy requiring ongoing supervision because of a care recipient's variable need

(m) dialysis treatment

The health and allied health services (with their respective codes) as listed in the PID are extracted and adapted in the table below:

Some of the health and allied health services listed in the PID are same or similar to the care services included in item 2.1 of Schedule 1 in the Minister's Determination, such as assistance with personal grooming, assistance with personal hygiene, and continence management.

Paragraphs 71 to 73 of GSTR 2011/D5 are relevant:

71. ...the written agreement required by the minister's determination only has to provide for a supply of a package of services.

72. Where the supplier, as principal, contracts with a third party for the provision of some items in the package, the requirement in the Minister's Determination that the package be supplied by the one entity is met when the third party is the supplier's agent, or a subcontractor of the supplier, and the charges are payable to the principal.¹⁷

73. However, if the supplier merely facilitates or arranges the provision of some part of the package by a third party, and the third party is making supplies in its own right directly to the resident, a separate package of supplies is made by each entity, and neither of the suppliers makes a GST-free supply of residential care under subsection 38-25(3).

The PID states that the health and allied health services marked with code A are available on site by arrangements between the residents and the third party supplier of such services.

You commented that although the services are arranged by you, to be provided to Qualifying Residents via a third party, they remain part of the services package that would be provided under the Resident Licence Agreement.

We consider that where the PID states that the health and allied health services marked with code A (which include some of the items 2.1 services) are available on site by arrangements between the residents and the third party supplier of such services, it is an indication that the residents themselves contract with the third party supplier for the health and allied health services. This will mean you are not the entity supplying the services. If this is the case, you are not the supplier in this case and subsection 38-25(3) will not apply.

As additional information, where you do not engage or enter into a contract with the third party supplier, for the third party supplier to provide the services to the residents, then whether the supply of such services made by the third party supplier is GST-free will depend on the circumstances in which the third party supplier makes the supply (and will not depend on your circumstances).

In summary:

The Property satisfies the definition of retirement village for the purposes of GST.

Your supply of services such as meals and laundry are not provided in a residential setting as required under paragraph 38-25(3)(a). This is because:

· The units in the Property do not satisfy all the definition of serviced apartment

· It is not conclusive that there is in force a written agreement under which you provide daily meals and heavy laundry services to all of the residents of your retirement village.

You are not the entity making the supply of some or all of the care services set out in item 2.1 or 3.8 of Schedule 1 to the residents. This is because we consider the third party health supplier is making their supply in their own right directly to the residents of your village.

Accordingly, as your supply of services (such as the provision of meals and laundry) to the residents of your retirement village do not satisfy all of the requirements in subsection 38-25(3), the supply of the services is not GST-free under the subsection.

The supply of your services to the residents is also not a GST-free supply under any other provisions of the GST Act.

Question 2:

Is your supply of accommodation to the Qualifying Residents in the retirement village GST-free under section 38-25 of the GST Act?

You considered that subsequent to your analysis under services, the supply of your accommodation to Qualifying Residents should be treated as GST-free under section 38-25(4).

Subsection 38-25(4) provides that a supply of accommodation is GST-free if it is made to a person in the course of making a supply to that person that is GST-free under subsection (1), (2) or (3).

Based on the information you have provided, we consider subsections 38-25(1) and (2) has no application to your situation, and we have determined earlier in this ruling that your services do not satisfy all the requirements of subsection 38-25(3) to be considered GST-free.

Accordingly, your supply of accommodation to the residents of your retirement village is not GST-free under subsection 38-25(4).

Your supply of accommodation to the residents of your retirement village is also not a GST-free supply under any other provisions of the GST Act.