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Ruling

Subject: Goods and services tax (GST) and aged and disability care

Question

Is GST payable on your supplies of care etc?

Answer

GST is not payable on your supplies of care to people in your care facilities or in their own home.

GST is not payable on your supplies of services where you receive funding under the Disability Services Act 1986 or a under a complimentary State law or Territory law in respect of the services.

GST is not payable on your supply of accommodation in your care facilities

GST may or may not be payable on your supplies of medical and allied health services and associated goods. See reasons for decision for more information.

GST may or may not be payable on your supply of ambulance services. See reasons for decision for more information.

Where a third party merely pays you for a GST-free supply you make to a care recipient, GST will not be payable on this payment.

Where a third party contracts you to supply care to people, GST may or may not be payable on the payment you receive from the third party. See reasons for decision for more information.

Where a third party contracts you to supply medical services or allied health services or associated goods to people, GST may or may not be payable on the payment which you receive from the third party. See reasons for decision for more information.

Where a third party contracts you to supply an ambulance service, GST may or may not be payable on the payment which you receive from the third party. See reasons for decision for more information.

Where a payment you receive is not consideration for a GST-free supply, GST will be payable on the payment.

Relevant facts and circumstances

You are registered for GST.

You provide care to aged persons and people with disabilities.

You provide these services in your care facilities and in the care recipient's own homes.

You support the care recipients with personal care, meals, mobility, social and recreational activities, doctor, hospital and allied health appointments and transport.

You receive funding under the Disability Services Act 1986 or under a complementary State law or a Territory law in respect of some of your care services.

Information about your care facilities:

Your care facilities are government funded.

The residents of your care facilities do not have a proprietary interest in these premises.

Residents can be moved at your discretion under certain circumstances.

Your care facilities are marketed and held out to the public as a place for care and accommodation.

The residents have limited rights compared to people who lease or own the premises they live in.

The care services you provide to residents of your care facilities are listed in Schedule 1 to the Quality of Care Principles.

Your care facilities are government funded.

Information about your supplies of community care:

You supply care to people in their own homes.

You receive funding from the Commonwealth, a State or a Territory in connection with these supplies.

The services are provided to frail, older persons or younger persons who

· have a moderate, severe or profound disability (including addiction to a drug)

· live at home, and

· would, in the absence of services of the kind mentioned in Schedule 1 to GST-free Supply (Care) Determination 2000, be at risk of prematurely or inappropriately needing

· long term care in a hospital or other institution, or

· residential care within the meaning of the Aged Care Act 1997.

The care is of a kind mentioned in Schedule 1 to the GST-free Supply (Care) Determination 2000.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 38-7

A New Tax System (Goods and Services Tax) Act 1999 section 38-10(1)

A New Tax System (Goods and Services Tax) Act 1999 section 38-10(2)

A New Tax System (Goods and Services Tax) Act 1999 section 38-10(3)

A New Tax System (Goods and Services Tax) Act 1999 section 38-10(4)

A New Tax System (Goods and Services Tax) Act 1999 section 38-10(5)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-25(2)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-25(4)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-30(4)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-60(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-60(2)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-30(3)

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

Reasons for decision

GST is payable by you where you make a taxable supply.

You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which 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.

(*Denotes a term defined in section 195-1 of the GST Act)

In your case, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST At. This is because:

· you supply care services etc for consideration

· you supply these things in the course or furtherance of an enterprise that you carry on

· these supplies are connected with Australia, and

· you are registered for GST.

There are no provisions in the GST Act under which your supplies are input taxed.

Therefore, what remains to be determined is whether your supplies are GST-free.

The relevant provisions of the GST Act under which you make or may make GST-free supplies are set out below.

Section 38-25 of the GST Act provides that a supply of residential care is GST-free if certain requirements are satisfied.

Subsection 38-25(2) of the GST Act states:

A supply of services is GST-free if:

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

(b) 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

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

You supply care to aged or disabled people in your care facilities. Therefore, the requirement of paragraph 38-25(2)(a) of the GST Act is satisfied.

The services for the purposes of paragraph 38-25(2)(b) of the GST Act are the services mentioned in Schedule 1 to GST-free Supply (Residential Care - Government-Funded Supplier) Determination 2000 that are provided to residents of a residential care facility. These are the same services as those listed in Schedule 1 to the Quality of Care Principles. Your care facilities are residential care facilities. Additionally, you supply the services mentioned in Schedule 1 to GST-free Supply (Residential Care - Government-Funded Supplier) Determination 2000 to residents of your residential care facility. Therefore, the requirement of paragraph 38-25(2)(b) of the GST Act is satisfied.

You receive funding from the Commonwealth, a State or a Territory in connection with your supplies of care in your care facilities. Therefore, the requirement of paragraph 38-25(2)(c) of the GST Act is satisfied.

Hence, you satisfy all of the requirements of subsection 38-25(2) of the GST Act. Therefore, you make GST-free supplies of care (including meals) to the residents of your care facilities. Hence, your supplies of these services are not taxable supplies. Therefore, GST is not payable on your supplies of these services to residents of your care facilities.

Subsection 38-25(4) of the GST Act 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 38-25(2) of the GST Act. Your supplies of accommodation to care recipients are GST-free under subsection 38-25(4) of the GST Act.

Care provided in the care recipient's own home - community care

Subsection 38-30(4) of the GST Act deals with community care. It states:

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) the supply of the care is 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).

You receive funding from the Commonwealth, a State or a Territory in connection with your supplies of care to people in their own home. Therefore, the requirement of paragraph 38-30(4)(a) of the GST Act is satisfied.

The requirement of paragraph 38-30(4)(b) of the GST Act will be satisfied where:

· the services are provided to a frail, older person or a younger person who

· has a moderate, severe or profound disability (including addiction to a drug)

· lives at home, and

· would, in the absence of services of the kind mentioned in Schedule 1 to GST-free Supply (Care) Determination 2000, be at risk of prematurely or inappropriately needing

· long term care in a hospital or other institution, or

· residential care within the meaning of the Aged Care Act 1997, and

· the care is of a kind mentioned in Schedule 1 to GST-free Supply (Care) Determination 2000.

You satisfy these requirements. Therefore, the requirement of paragraph 38-30(4)(b) of the GST Act is satisfied.

As you satisfy all of the requirements of subsection 38-30(4) of the GST Act, your supplies of care (including meals) to people in their own homes are GST-free. Therefore, they are not taxable supplies. Hence, GST is not payable on these supplies.

Supplies of specialist disability services

A supply of services is GST-free under section 38-40 of the GST Act if the supplier receives funding under the Disability Services Act 1986 or under a complimentary *State law or *Territory law in respect of the services. Therefore, your supplies of services for which you receive such funding are not taxable supplies. Hence, GST is not payable on these supplies.

Medical services

Section 38-7 of the GST Act provides that a supply of medical services is GST-free if certain requirements are satisfied.

Section 38-7 of the GST Act states:

(1) A supply of a *medical service is GST-free.

(2) However, a supply of a *medical service is not GST-free under subsection (1)

if:

(a) it is a supply of a *professional service rendered in prescribed circumstances

within the meaning of regulation 14 of the Health Insurance Regulations made under the Health Insurance Act 1973 (other than the prescribed circumstances set out in regulations 14(2)(ea), (f) and (g)); or

(b) it is rendered for cosmetics reasons and is not a *professional service for

which medicare benefit is payable under Part II of the Health Insurance Act 1973

(3) A supply of goods is GST-free if:

(a) it is made to an individual in the course of supplying to him or her a *medical

service the supply of which is GST-free; and

(b) it is made at the premises at which the medical service is supplied.

Section 195-1 of the GST Act defines medical service. It states:

medical service means:

(a) a service for which medicare benefit is payable under Part II of the Health Insurance Act 1973; or

(b) any other service supplied by or on behalf of a *medical practitioner or *approved pathology practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the *recipient of the supply.

Where you make a supply that satisfies the requirements of section 38-7 of the GST Act, you make a GST-free supply.

The recipient of your supplies of services will be the care recipient if they contract you to provide the services.

The care recipient will also be the recipient of your supplies of services if another party has a fiduciary relationship with the care recipient and that other party has to consent to the supply of the health service for the care recipient (in accordance with paragraph 156 of Goods and Services Tax Ruling GSTR 2006/9). An example of such a fiduciary relationship is where a custodial parent gives consent for the medical treatment of a child.

Allied health services

A supply of allied health services is GST-free under subsection 38-10(1) of the GST Act if:

(a) it is a service of a kind specified in the table in subsection 38-10(1) of the GST Act

(b) the supplier is a recognised professional in relation to the supply of services of that kind, and

(c) the supply would generally be accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

The table in subsection 38-10(1) of the GST Act lists the following kinds of services:

· Aboriginal or Torres Straight Islander health

· Acupuncture

· Audiology, audiometry

· Chiropody

· Dental

· Dietary

· Herbal medicine (including traditional Chinese herbal medicine)

· Naturopathy

· Nursing

· Occupational therapy

· Optometry

· Osteopathy

· Paramedical

· Pharmacy

· Psychology

· Physiotherapy

· Podiatry

· Speech pathology

· Speech therapy

· Social work

Recognised professional is defined in section 195-1 of the GST Act. It provides that a person is a recognised professional, in relation to the supply of a service of a kind specified in the table in subsection 38-10(1) of the GST Act if:

(a) the service is supplied in a State or Territory in which the person has a permission or approval, or is registered, under a State law or a Territory law prohibiting the supply of services of that kind without such permission, approval or registration; or

(b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind, or

(c) in the case of services covered by item 3 in the table - the service is supplied by an accredited service provider within the meaning of section 4 of the Hearing Services Administration Act 1997.

Subsection 38-10(2) of the GST Act states:

However, a supply of a pharmacy service is not GST-free under subsection 38-10(1) unless it is:

a) a supply relating to a supply that is GST-free because of section 38-50; or

b) a service of conducting a medication review.

Subsection 38-10(3) of the GST Act states:

A supply of goods is GST-free if:

(a) it is made to a person in the course of supplying the person a service the supply of which is GST-free under subsection (1)(other than a service referred to in item 8, 9, 12 or 15 of the table in subsection (1)); and

(b) it is made at the premises at which the service is supplied.

Subsection 38-10(4) of the GST Act states:

A supply of goods is GST-free if:

(a) it is made to a person in the course of supplying to the person a service referred to in item 8 or 9 of the table in subsection (1); and

(b) it is supplied, and used or consumed, at the premises at which the service is supplied

Ambulance services

Subsection 38-10(5) of the GST Act states:

A supply is GST-free if it is provided by an ambulance service in the course of the treatment of the *recipient of the supply.

Where you make a supply that satisfies the requirements of section 38-10 of the GST Act, you would make a GST-free supply.

Arrangements involving third party payers

Subsection 38-60(1) of the GST Act states:

If:

(a) a supply is a supply of a service to an insurer; and

(b) the service is the supplier making one or more other supplies of goods or services to an individual; and

(c) at least one of the other supplies is:

(i) wholly or partly * GST-free under this Subdivision; and

(ii) for settling one or more claims under an * insurance policy of which the insurer is an insurer;

the first-mentioned supply is GST-free to the extent that the other supplies mentioned in paragraph (b) are GST-free under this Subdivision.

The subdivision referred to in subparagraph 38-60(2)(c)(i) of the GST Act encompasses section 38-7, section 38-10, section 38-25, section 38-30 and section 38-40 of the GST Act.

Where an insurance company contracts you to make a supply to a care recipient that is GST-free under the care or health provisions referred to above, you would make a GST-free supply to the insurance company under subsection 38-60(1) of the GST Act provided that the supply you make to the care recipient is for settling one or more claims under an insurance policy of which the insurance company is an insurer. Therefore, under such circumstances, you would not make a taxable supply. Hence, GST would not be payable on this supply.

Subsection 38-60(2) of the GST Act states:

If:

(a) a supply is a supply of a service to an *operator of a *compulsory third party scheme; and

(b) the service is the supplier making one or more other supplies of goods or services to an individual; and

(c) at least one of the other supplies is:

(i) wholly or partly *GST-free under this Subdivision; and

(ii) made under the compulsory third party scheme;

the first-mentioned supply is GST-free to the extent that the other supplies mentioned in paragraph (b) are GST-free under this Subdivision.

Where an operator of a compulsory third party scheme contracts you to make a supply to a care recipient that is a free under the care or health provisions referred to above, you would make a GST-free supply to the operator of the compulsory third party scheme under subsection 38-60(2) of the GST Act provided that the supply you make to the care recipient is made under the compulsory third party scheme. Therefore, under such circumstances, you would not make a taxable supply. Hence, GST would not be payable on this supply.

Subsection 38-60(3) of the GST Act states:

If:

(a) a supply is a supply of a service to an *Australian government agency; and

(b) the service is the supplier making one or more other supplies of goods or services to an individual; and

(c) at least one of the other supplies is GST-free under this Subdivision;

the first-mentioned supply is GST-free to the extent that the other supplies mentioned in paragraph (b) are GST-free under this Subdivision.

Where an Australian government agency contracts you to make a supply to a care recipient that is GST-free under the care or health provisions referred to above, you would make a GST-free supply to the Australian government agency under subsection 38-60(3) of the GST Act. Therefore, under such circumstances, you would not make a taxable supply. Hence, GST would not be payable on this supply.

There are no provisions of the GST Act under which your supplies are GST-free other than the provisions set out above.

Where a third party merely pays you for a GST-free supply you make to a care recipient, GST will not be payable on the payment because it would be third party consideration for a GST-free supply made to the care recipient.

Where a third party contracts you to make a supply to a care recipient and the third party is not an insurer, an operator of a compulsory third party scheme or an Australian government agency, the payment from the third party will not be consideration for a GST-free supply.

Where a payment which you receive is not consideration for a GST-free supply, GST will be payable on the payment, as all of the requirements of section 9-5 of the GST Act would be satisfied.