Edited version of private advice

Authorisation Number: 1012648277434

Ruling

Subject: GST and Home Care

Question 1

Does Goods and Services Tax (GST) apply to home care services rendered by a service provider?

Answer

The supply of home care services by the service provider will be GST-free under section 38-30 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevant facts and circumstances

• You, an individual, became totally disabled following an accident and was consequently confined to a wheelchair.

• You are not employable and receive no Government assistance.

• The payments for care services are drawn from funds from a compensation payout you received following the accident. The funds have been professionally invested by your trustee.

• Since the accident, you need 24 hour care in your own home.

• Last year, the care was provided by a care provider A. The costs were approximately $xxxxxx.

• Discussions with your trustee led to the conclusion that you need to substantially reduce the care costs if you are to have sufficient funds to meet your future care costs.

• You intend to set up a not-for-profit company (the Company) of which you are the sole Director and shareholder for the sole purpose of employing care staff to provide home care services to you. The carers that will be employed by the Company are intended to be certified carers, not enrolled or registered nurses, working in shift at your home.

• It is intended that the carers will provide the following services: transfer from bed to commodes, showering, shaving, toileting, dressing, transfer to bed and wheelchair and getting meals.

• The expenses will be paid by the Company and invoiced to the trustee for payment of funds.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Subsection 38-30(3)

Aged Care Act 1997 Section 45-3

Reasons for decision

The Company employs care staff and assign their services to you. As the employees of the Company, the carers are not carrying on any enterprise in relation to providing the care services to you and hence there is no GST consequence in relation to activities of the employees of the Company.

The care services are supplied by the Company to you. In relation of the supply of care services from the Company to a disabled person (in your individual capacity), where subsection 38-30(3) applies, the supply will be GST-free. This subsection states:

A supply of *home care is GST-free if the supply is of services:

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

(b)  that 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.

*An asterisk denotes a defined term in the GST Act.

This section requires three conditions must be met for a supply of home care to be GST-free:

• the care service provided by the company is a service of home care

• the care is provided to one or more aged or disable people [paragraph 38 30(3)(a)], and

• the care service is of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles [paragraph 38-30(3)(b)].

Home care

Section195-1 of the GST Act defines 'home care' as having the meaning given by section 45-3 of the Age Care Act 1997 (Age Care Act). This section provides that home care is care consisting of a package of personal care services and other assistance provided to a person who is not provided with residential care.

The Company supplies personal care services to you, a disabled person in your own home and does not provide residential care. Accordingly, the personal care services provided by the Company meet the meaning of 'home care' in section 45-3 of the Age Care Act.

Paragraph 38-30(3)(a) of the GST Act

The Company supplies personal care services to aged or disabled people. Therefore, paragraph 38-30(3)(a) of the GST Act is satisfied.

Paragraph 38-30(3)(b) of the GST Act

Under paragraph 38-30(3)(b) of the GST Act, the care services provided by the entity must be of a kind that is covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles.

The ATO considers that the following services are covered by Item 2.1 of Part 2 of the Quality of Care Principles:

• 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 patients 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 person, 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 of Part 2 of Schedule 1 to the Quality of Care Principles.

Further, subsection 38-30(3) does not require such services be performed within your residence, and accordingly, these services will be GST-free irrespective of whether those services are provided within your residence or whilst outside that residence. For example, services to assist a person while eating will be GST-free irrespective of whether provided within the person's home or whilst eating at a restaurant.

Time spent not actively caring for you, but simply being there to provide services of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles as you require, will be GST-free.

Similarly, it is considered that where you require an attendant care provider to be able to provide these services 24-hours a day, the provision of 'sleep over' services will be GST-free.

You have provided that the carers assist you with: transfer from bed to commodes, showering, shaving, toileting, dressing, transfer to bed and wheelchair and getting meals etc. Those services fall within item 2.1. However, "getting meals" if it means meal preparation is not covered by item 2.1 of the Quality of Care Principles and is therefore not GST-free under subsection 38-30.

Please note that other services including the following services provided by care providers are not GST-free under subsection 38-30(3):

Monitoring Medication;

Grocery shopping;

Provision of travel services;

Domestic chores and gardening;

Provision of social and community activities.

Travel services are not covered by item 2.1 of Part 2 of Schedule 1 of the Quality of Care Principles. Accordingly, where a care provider provides care services to a privately funded patient at a standard hourly rate and charges additional fees for transporting patients to and from social activities, etc., the additional fees charged in respect of the travel services will be taxable and subject to GST.

However, where the carers are making a composite supply where the dominant part of the supply is the personal care services (covered by Item 2.1) and transportation is incidental or ancillary to the supply of the community care, the whole supply will be GST-free.

In conclusion, the care services provided to you by the Company are GST-free. If a supply is GST-free then no GST is payable on the supply and an entitlement to an input tax credit (GST credit) for anything acquired to make the supply is not affected.