Edited version of your written advice

Authorisation Number: 1012693084816

Ruling

Subject: GST and supply of accommodation, food and other personal necessities to disable

Question

Is a supply of accommodation, food and other personal necessities by you to residential clients with challenging behaviours and disabilities a GST free supply under section 38-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. The supply of accommodation, food and other personal necessities by you to residential clients with challenging behaviours and disabilities is a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are an Australian entity which is registered for goods and services tax (GST).

You are a small family owned business. You provide residential care and respite services to adults with challenging behaviours and disabilities.

You have X residential adults with challenging behaviours and disabilities (residential clients) who are on disability pensions.

You charge residential clients $xx per day for accommodation and $xx for food and personal necessities such as toilet paper, cleaning products, toothpaste etc.

You do not provide any furniture, bedding and telephone to your residential clients.

You do not receive any funding from the Commonwealth, State or a Territory Governments to provide accommodation, food and personal necessities to residential clients.

The residential clients receive disability pensions and they use their pensions to pay you for their accommodation, food and personal necessities.

In addition, you provide certain services mentioned in item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 of the Quality of Care Principles to these residents. These services include the following:

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.

Excludes hairdressing

These daily living services are not paid for by the residents. These services are invoiced and paid by the Department of Communities.

You do not have a written agreement with the residential clients to provide daily living services, accommodation, food and personal necessities as a package.

You do not provide any of the nursing services from Item 3.8 of Part 3 of Schedule 1 of the Quality of Care Principles.

You do not provide any home care services to residential clients.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-25(3)

Reasons for decisions

GST is payable on a taxable supply. 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.

The supply of accommodation, food and personal necessities by you to residential clients will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.

Based on the facts given, the supply of accommodation, food and personal necessities by you to residential clients satisfies paragraphs 9-5(a) to (d) of the GST Act, as follows:

(a) you make the supply of accommodation, food and personal necessities to residential clients for consideration by way of payments;

(b) you make the supply in the course of carrying on its enterprise;

(c) the supply is connected with Australia; and

(d) you are registered for GST in Australia.

However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.

Input taxed supply

There are no provisions in the GST Act under which your supply of accommodation, food and personal necessities to residential clients would be input taxed.

GST-free

We need to determine whether the supply of accommodation, food and personal necessities to residential clients is GST-free.

Section 38-25 of the GST Act provides that a supply of residential care is GST-free if certain requirements are satisfied. In particular, subsection 38-25(3) of the GST Act (non-Government funded supplier) is relevant in this case.

Subsection 38-25(3) 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 services include, and are only provided to people who require the services (care services set out in:

i. item 2.1 (daily activities assistance) of Part 2 of that Schedule; or

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

The supply of accommodation, food and personal necessities by you to residential clients will be a GST-free where the requirements of subsection 38-25(3) are met.

Goods and Services Tax Ruling GSTR 20012/3 (GSTR 2012/3) provides guidance on GST treatments of care services and accommodation in retirement villages and privately funded nursing homes and hostels.

Paragraph 38-25(3)(a) of the GST Act

The term "residential setting" is not defined in the GST Act, however the ATO considers the term in paragraph 38-25(3)(a) to mean:

(a) a residential care facility complying with state or territory legislation regulating the supply of residential care services, and

(b) in those states or territories that do not regulate residential care facilities, a congregate care facility (such as a nursing home or aged care hostel) conducted by the supplier of residential care services. The facility must primarily provide residential care services. The accommodation is to be suitable for the aged, frail and/or disabled residents having regard to their long term needs as assessed in accordance with the written agreement with the supplier of the residential care services.

Based on the facts provided, you are a privately owned residential care facility that provides accommodation and care services to residential clients with challenging behaviours and disabilities. Therefore, your supply satisfies the requirement of paragraph 38-25(3)(a) of the GST Act.

Paragraphs 38-25(3(b)

The Minister's Determination, referred to in paragraph 38-25(3)(b), requires

• a care recipient to have a continuing need for the services mentioned in item 2.1 services for daily living activities assistance or item 3.8 services; and

• services supplied under a written agreement with the supplier, as a package made up of:

i. the services mentioned in item 2.1 or item 3.8; and

ii. other services in schedule 1 that are needed by the care recipient ; and

iii. accommodation; and

• the charges for services and for accommodation are payable to the same entity.

From the facts provided, you provide item 2.1 services to your residential clients who have continuing need for at least one of the services covered by item 2.1. However, you advised us that you do not have any written agreement with those residential clients to provide daily living activities assistance services, accommodation, food and personal necessities as a package. Hence, your supply of accommodation, food and other personal necessities to residential clients does not satisfy paragraph (b) of subsection 38-25(3) of the GST Act.

Accordingly, your supply of accommodation, food and other personal necessities to residential clients does not meet all the requirements of subsection 38-25(3) of the GST Act.

Furthermore, the supply of accommodation, food and other personal necessities to residential clients does not satisfy any other GST-free provisions.

In summary, the supply of accommodation, food and other personal necessities by you to residential clients is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on that supply.