Edited version of your written advice

Authorisation Number: 1013001994444

Date of advice: 26 April 2016

Ruling

Subject: GST and home care

Question

Are you making a GST-free supply under your arrangement with the Council when you deliver meals to a consumer with a Home Care Agreement with the Council?

Answer

Yes. The supply of meals is GST-free under subsection 38-60(3) of the A New Tax System (Goods and Services Tax) Act 1999.

Relevant facts and circumstances

You are registered for GST.

You provide home delivered meals to private clients and clients receiving a Home Care Package by a Home Care Provider.

You have entered into a service provider agreement with the Council. You have provided a copy of the Care Service Provider Agreement (the Agreement). The relevant information is:

• In consideration for providing the services, the Council will pay you the fees specified.

• When requested by the Council you must perform and supply the services specified by the Council to their clients.

• An online invoicing and payment service will be used to manage provider invoicing and payment via direct debit/credit. This service will incur a service charge deducted from payments.

The Council has a Home Care Agreement in place with the consumer (care recipient) to which you deliver meals. The Council receives government funding/subsidy in relation to that supply of home care.

The Council has advised you that as a supplier you will be invoicing the Home Care Package client directly and as the Home Care Package is exempt from GST, GST should not be charged.

The Council has advised you it is using a financial service provider to maintain individual accounts in trust for clients and manage all incoming and outgoing payments. Suppliers submit invoices online and are paid immediately on approval via direct credit within a matter of days. This incurs a charge.

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 Section 9-40

A New Tax System (Goods and Services Tax) Act 1999 Section 38-30, and

A New Tax System (Goods and Services Tax) Act 1999 Section 38-60.

Reasons for decision

In this reasoning:

• unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

• all terms marked by an asterisk are defined terms in the GST Act

• all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on ato.gov.au

Section 9-40 provides that you must pay the GST payable on any taxable supply that you make.

Section 9-5 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 the indirect tax zone; 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 meals under your arrangement with the Council satisfies the requirements of paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) as follows:

• the supply is for consideration

• the supply is made in the course of your enterprise

• the supply is connected with Australia, and

• you are registered for GST.

Therefore, the supply of the meals is taxable to the extent that the supply is not input taxed or GST-free.

There is no provision in the GST Act for the supply of the meals to be input taxed. However we will consider whether the supply is GST-free.

Home care

For a supply to be GST-free under section 38-30 it must satisfy one of the following subsections:

(1) A supply of *home care is GST-free if home care subsidy is payable under Part 3.2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) 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 *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.

(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) 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).

'Home care' has the meaning given by section 45-3 of the Aged Care Act 1997 which provides:

Home 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.

Government subsidy or funding

One of the requirements for GST-free home care under subsection 38-30(1) is that the supplier receives a subsidy under Part 3.2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 for the care.

Similarly, it is also a requirement under subsections 38-30(2) and 38-30(4) that the supplier receives government funding in connection with the supply.

It is a Home Care Provider, in this case the Council, and not the consumer that receives a subsidy under Part 3.2 of the Age Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 or government funding.

The Council may use the subsidy or government funding to supply services:

• directly to consumers, or

• contract another supplier to deliver the services to the consumer.

In both circumstances, it is the Home Care Provider, (the Council) that receives the subsidy or government funding for the supply of the home care services to the care recipient.

There are no circumstances where the care recipient receives the subsidy under Part 3.2 of the Age Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 or the government funding.

Consumer Directed Care (CDC) is not a type of home care package by itself, but is the approach used to provide home care services to give greater flexibility and choice to the care recipient (consumer). Home care packages are paid by the Australian Government to the Care Service Provider that supplies care and services. The Consumer Directed Care approach does not impact on 'who' receives the funding. A Home Care Provider is not an agent of a consumer in relation to a government funded home care services.

Meals supplied as part of home care

Government funded supplier

The supply of meals to an aged or disabled person by a government funded supplier is GST-free where the requirements of subsection 38-30(1), (2) or (4) are met.

You have a service agreement with the Council under which you are to supply meals to the Council's clients. The Council will notify you which consumers are to receive the meals. For providing this service to the Council, the Council pays you the service fee.

Subsection 38-30(1) provides that the supply of meals as part of the supply of home care is GST-free where a home care subsidy is payable under Part 3-2 of the Aged Care Act 1997 to the supplier.

You do not receive a subsidy under Part 3-2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997. Therefore you do not satisfy the requirements of subsection 38-30(1).

Subsection 38-30(2) provides that the supply of meals as part of the supply of home care is GST-free where the supplier receives funding under the Home and Community Care Act 1985 in connection with that supply.

You do not receive funding under the Home and Community Care Act 1985. Therefore you do not satisfy the requirements of subsection 38-30(2).

Subsection 38-30(4) provides that 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).

The Aged Care Minister has made the GST-free Supply (Care) Determination 2000 (Care Determination). The Care Determination provides that for the purposes of paragraph 38-30(4)(b), the supply of care of a kind mentioned in Schedule1 to a targeted person is similar to a supply that is GST-free because of subsection 38-30(2). Included in Schedule 1 to the Care Determination is the provision of food (Item 5).

It is administratively accepted that the Council is a State and the payment from the Council is funding for the purposes of this provision. However the supply to the Council is not 'care' as care can only be supplied to an individual. A business entity cannot be supplied with care.

Therefore you do not satisfy the requirements of subsection 38-30(4).

Non-government funded supplier

Supplies of meals by a non-government funded supplier are not GST-free under subsection 38-30(3) because meals are not covered by Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles.

Subsection 38-30(3) does not apply to you.

Subcontracted services

In your case you are subcontracted by the Council (a Home Care Provider) to deliver services (meals) to a consumer receiving a Home Care Package.

That is you are making a supply to the Council of providing the stipulated services (meals) to the client of the Council.

Third party procured GST-free health supplies

Subsection 38-60(3) and (4) states:

(3) 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 wholly or partly *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.

Parties may agree for supply not to be GST-free

(4) However, a supply is not GST-free (to any extent) under this section if the supplier and the *recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

An Australian government agency is defined pursuant to section 195-1 of the GST Act and section 995-1 of the Income Tax Assessment Act 1997 as:

(a) the Commonwealth, a State or a Territory; or

(b) an authority of the Commonwealth, a State or a Territory.

It is accepted that the Council is an Australian government agency.

Under the contract with the Council, you are making the supply of the service of making a supply of goods and/or services to an individual noting that you are notified by Council which clients are to receive the services.

The same reasoning as stated previously in respect of subsection 38-30(4) applies with the exception that the underlying supply you make to the individual is a supply of 'care' for the purposes of that provision.

Accordingly, the supply to Council is GST-free to the extent that the Council's supply to the individual is GST-free.

Provided you have not agreed for the supply not to be GST-free, the supply of meals under your arrangement with the Council is GST-free under section 38-60.