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Edited version of your written advice
Authorisation Number: 1051200139667
Date of advice: 13 March 2017
Ruling
Subject: GST and specialist disability services
Question
Are your supplies directly or via an intermediary to persons with a disability within the 'target group' as defined by section 8 of the Disability Services Act 1986 (Cth) (DS Act 1986) GST-free under section 38-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes. Your supplies directly or via an intermediary to persons with a disability within the 'target group' as defined by section 8 of the DS Act 1986 are GST-free under section 38-40 of the GST Act.
Relevant facts and circumstances
● You are a government entity that is registered for GST effective from 1 July 2000.
● To carry out your objectives you receive funding under the DS Act 1986 and other relevant Acts.
● One of your objectives is to provide assistance to people with a disability either directly or through an intermediary.
● Section 10 of the DS Act 1986, which deals with Financial assistance for eligible services, states that:
Subject to subsection (3), the Minister may approve the making of a grant of financial assistance to a State or eligible organisation in relation to the provision by the State or eligible organisation of an eligible service for persons included in the target group.(emphasis added)
● Target group etc. is defined in section 8 of the DS Act as follows:
(1) The target group for the purposes of this Part consists of persons with a disability that:
(a) is attributable to an intellectual, psychiatric, sensory or physical impairment or a combination of such impairments;
(b) is permanent or likely to be permanent; and
(c) results in:
(i) a substantially reduced capacity of the person for communication, learning or mobility; and
(ii) the need for ongoing support services.
(2) Where a service is provided predominantly for persons included in the target group, the service shall be taken, for the purposes of this Part, to be provided for persons in the target group notwithstanding that the service is also provided for some persons who are not included in the target group.
● Most of the people with disabilities that you provide assistance to fall within the definition of 'target group' as defined in section 8 of the DS Act 1986.
● To receive assistance, people must satisfy certain criteria and people within the 'target group' have a greater likelihood of meeting the eligible criteria.
● Regardless of whether you make supplies directly to the person with a disability or via an intermediary you are still required, among other things, to receive and manage the applications and assess the applicant's eligibility for assistance.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-40
Reasons for decision
Section 38-40 of the GST Act states as follows:
38-40 Specialist disability services
A supply of services is GST-free if the supplier receives funding under the Disability Services Act 1986 or under a complementary *State law or *Territory law in respect of the services.
(* denotes a defined term in section 195-1 of the GST Act).
For your supplies to come within section 38-40 of the GST Act, two elements must be satisfied. Firstly, you must receive funding under the DS Act 1986 and secondly, that funding must be in respect of the services.
The DS Act 1986 provides at section 10 in relation to 'Financial assistance for eligible services', that the Minister may approve the granting of financial assistance to a State or eligible organisation in relation to the provision by the State or eligible organisation of an eligible service for persons included in the target group.
In relation to the payment of financial assistance, you receive funding under the DS Act 1986 and other relevant Acts. The Commissioner considers that, to satisfy the funding requirement for section 38-40 of the GST Act, it is sufficient that only part of the funding for the services stems from the DS Act 1986. A supply is not prevented from being wholly GST-free under this section because the supplier receives its funding from sources additional to the DS Act 1986.
The term 'service' is not defined in the GST Act.
The heading for section 38-40 however refers to 'specialist disability services', and pursuant to section 182-1 of the GST Act, headings to sections are said to form part of the GST Act.
This indicates that the type of 'services' referred to in section 38-40 of the GST Act is a reference to 'specialist disability services'.
Section 8 of the DS Act 1986 sets out the 'target group' that this act is concerned with, which consists of persons with a disability that is attributable to an intellectual, psychiatric, sensory or physical impairment (or a combination of such impairments) and which is permanent or likely to be permanent. As well, this disability must result in a substantially reduced capacity for communication, learning or mobility, with the person having a need for ongoing support services.
You have advised that a large portion of the people that you provide assistance to, for which you are funded, are persons with disabilities who fall within the definition of 'target group' as defined in section 8 of the DS Act 1986. You explain that this is due to those persons having a greater likelihood of meeting the eligibility criteria used by you in assessing who is to receive assistance.
In addition, when framing your question, you have specifically stated that the ruling is only to cover supplies made to persons with a disability within the 'target group' as defined by section 8 of the DS Act 1986.
Furthermore, regardless of whether you make supplies directly to the person with a disability or via an intermediary you are still required, among other things, to receive and manage the applications and assess the applicant's eligibility for assistance.
Given the specific facts of your case, the Commissioner is satisfied that you receive funding under the DS Act 1986 in respect of the specialist disability services which you provide to persons with a disability within the 'target group'.
As such, your supplies either directly or via an intermediary to persons with a disability within the 'target group' as defined by section 8 of the DS Act 1986, is a GST-free supply under section 38-40 of the GST Act. Importantly, this decision does not mean that the Commissioner accepts that all services supplied by way of an intermediary will be considered to effectively be supplied to individuals in the context of paragraph 155 of Goods and Services Tax Ruling 2006/9 (GSTR 2006/9).