Edited version of private advice

Authorisation Number: 1051619566296

Date of advice: 18 December 2019

Ruling

Subject: GST and property

Question 1

Is specified entity's supply of home care 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 (Item 2.1 daily living activities assistance), GST-free under the A New Tax System (Goods and Services Tax) Act 1999(GST Act)?

Answer 1

Yes. Non-government funded services supplied by specified entity to consumers, that are of a kind covered by Item 2.1 daily living activities assistance, are GST-free under subsection 38-30(3) of the GST Act.

Question 2

Is specified entity's supply of nursing services GST-free under the GST Act?

Answer 2

Yes, specified entity's supply of nursing services is GST-free under section 38-10 of the GST Act.

Question 3

Is the specified entity making an input taxed supply of premises by way of lease under section 40-35 of the GST Act?

Answer 3

Yes.

Relevant facts and circumstances

Specified entity is the owner of the specified place located at specified address. Specified entity is registered for goods and services tax (GST).

Specified entity enters into 99 year lease agreements with residents of the village. Pursuant to the arrangement outlined in the Contract, the resident is required to pay an ingoing contribution which is comprised of a long term loan to the Owner.

The residents live in villas and not apartments. They are all single storey. Some are semi- detached.

The respective obligations of the parties in regard to the long term loan are outlined in the specified deed between the resident and specified entity which is entered into concurrently with the Contract.

Specified entity have appointed specified entity as the Operator of the Village.

Specified entity is registered for GST and provides various services to the resident as outlined in the:

·   Contract

·   Agreement

·   Agreement

In general, specified entity provide a 24 hour 7 day a week on call service with employed nurses. The nurses respond to emergencies. This service is listed under Agreement. The nursing 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. The supply of nursing services is generally 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 residents do not automatically utilise all the facilities of the village. Many are expected to take the low involvement model. This means they can live in their units and keep house themselves. They make their own meals and attend to their laundry needs. They are not dependent on specified entity's services. The residents opt in for meals, care and household assistance. However, there is usually a charge if they choose to use specified entity's services.

Specified entity have also begun a process of accreditation in order to be able to provide care via Government aged care packages. Meanwhile the residents may continue to receive care and support in their villas. Their current provider of Government subsidised care packages provides the services.

This ruling relates only to pre accreditation supplies.

Specified entity is not an approved provider within the meaning of the Aged Care Act 1997.

Specified entity does not receive funding from the Commonwealth, a State or a Territory in connection with the supply of services.

The residents have exclusive rights to the leased premises like a normal tenancy arrangement. The residents can have overnight guests. They do not have to seek approval for temporary absences, for example, to attend external appointments or to visit friends and relatives. The residents cannot be moved at the Operator's discretion.

The premises are marketed and held out to the public as a place for care and accommodation, rather than just accommodation.

The premises are built for residential accommodation with physical characteristics including bedroom(s), bathroom(s), toilet(s) and kitchen. The premises are used predominantly for residential accommodation.

The accommodation in the premises intended to be for persons who are at least 55 years old, or who are a certain age that is more than 55 years.

The premises include communal facilities for use by the residents of the premises. The communal facilities are a dining room, lounge area, library area and barbeque area.

Specified entity's supply of services is not covered by an extra services fee within the meaning of Division 35 of the Aged Care Act 1997.

Specified entity does not receive a subsidy payable under the Aged Care Act 1997.

Specified entity does not receive a subsidy payable under the Aged Care (Transitional Provisions) Act 1997.

Specified entity does not receive funding under the Home and Community Care Act 1985.

Specified entity does not provide hairdressing services. A third party will visit the premises to supply hairdressing services to the residents.

Specified entity is not an endorsed charity, gift deductible entity or a government school.

Specified entity is not an endorsed charity, gift deductible entity or a government school.

Specified entity and specified entity do not make supplies to a participant within the meaning of the National Disability Insurance Scheme Act 2013.

Specified entity and specified entity do not receive funding under the Disability Services Act 1986 or under a complementary State law or Territory law.

The following documents have been provided to us for the purpose of this ruling:

1. Contract entered into between specified entity and the resident

2. Deed of Loan entered into between specified entity and the resident.

3. Agreement entered into between specified entity and the resident

4. Agreement entered into between specified entity and the resident.

5. Agreement entered into between specified entity and specified entity.

Relevant legislative provisions

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

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 40-35

A New Tax System (Goods and Services Tax) Act 1999 subsection 40-35(1)

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

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

Question 1

Is specified entity's supply of home care 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 (Item 2.1 daily living activities assistance), GST-free under the A New Tax System (Goods and Services Tax) Act 1999(GST Act)?

Non-government subsidised/funded services

As specified entity provides non-government funded home care services subsection 38-30(3) needs to be considered in specified entity's circumstances.

Subsection 38-30(3) 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.

'Home care' is defined in subsection 45-3(1) of the Aged Care Act 1997. It states:

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.

'Residential care' does not include care provided to a person in the person's private home. Specified entity provides care to a person in the person's private home. Therefore, the residents are not being provided with 'residential care'.

It follows that specified entity is supplying 'home care'.

Part 2 of Schedule 1 of the Quality of Care Principles 2014 outlines the following items of daily living activities assistance (Item 2.1):

The GST and home care guidance on the ATO website (search for 'QC 55890' on the ATO website) lists examples of services that are not covered by Item 2.1:

·   hairdressing

·   housework and gardening

·   preparing meals and grocery shopping for individuals

·   aids, appliances and monitoring medication; however, they may be GST-free health supplies under a different section of the GST Act

·   rehabilitation and health care services; however, they may be GST-free health supplies under a different section of the GST Act

·   help with writing cheques, emails and letters

·   advocacy services

·   accommodation

·   driving individuals to and from appointments and social activities

·   social and community activities, such as providing companionship, craft and reading activities to individuals.

Specified entity is supplying home care services to one or more aged or disabled people.

Specified entity's supply of home care services, that are of a kind covered by Item 2.1 daily living activities assistance, are GST-free.

Apportionment

Specified entity may supply a package of home care services that:

·   includes home care services of a kind not covered by Item 2.1 or

·   are not otherwise GST-free.

If so then those items will generally be taxable.

Specified entity will be making a mixed supply where they supply a package of care that is partly GST-free and partly taxable. This being the case, specified entity will need to apportion between the GST-free and taxable components.

Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) deals with apportionment. GSTR 2001/8 provides methods and examples that specified entity may use to apportion the consideration for a supply that contains separately identifiable taxable and non-taxable parts.

One method is outlined in paragraph 104 and 105 of GSTR 2001/8:

Relative time to perform the supply

104. Where you supply services and charge them out on a time basis (for example, at an hourly rate), it may be reasonable to apportion the consideration for a mixed supply based on the time taken to perform the relevant taxable and non-taxable parts of the supply. This method may be suitable where you make mixed supplies of professional or trade services.

Example 16 - GST-free and taxable services

105. Under direction from a doctor, Gilda provides home care to a privately funded client in the client's own home.... She charges a flat hourly rate for her services that include helping to feed and dress her client. These services are GST-free under section 38-30. Gilda also tidies her client's house and garden. These latter services are taxable. Gilda apportions the consideration for her services on the number of hours it takes for her to perform the services. This is a reasonable method of apportionment to ascertain the value of the taxable part of the supply.

Question 2

Is specified entity's supply of nursing services GST-free under the GST Act?

Nursing

Subsection 38-10(1) provides:

A supply is GST-free if:

(a) it is a service of a kind specified in the table in this subsection, or of a kind specified in the regulations; and

(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.

Specified entity's supply of nursing services is of a kind specified in the above table.

We now consider what it means to be a recognised professional. The term 'recognised professional' is defined in section 195-1. A recognised professional exists when the nursing 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.

Your nurses meet this requirement. Therefore, your nurses are recognised professionals.

In addition, your supply of nursing services is generally accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

Your nursing services satisfy subsection 38-10(1). So, your supply of nursing services is GST-free.

Question 3

Is the specified entity making an input taxed supply of premises by way of lease under section 40-35 of the GST Act?

Lease

A supply of premises that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed, under subsection 40-35(1), if:

the supply is of *residential premises (other than a supply of *commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises).

However:

(a)  the supply is input taxed only to the extent that the premises are to be

used predominantly for residential accommodation (regardless of the term of occupation); and

(b)  the supply is not input taxed under section 40-35 if the lease, hire or licence, or the renewal or extension of a lease, hire or licence, is a *long term lease.

The term residential premises is defined in section 195-1 of the GST Act. It provides that residential premises means land or a building, that is occupied as a residence or for residential accommodation, regardless of the term of occupation. The actual use of the premises as a residence or for residential accommodation is relevant to satisfying this limb of the definition.

Premises, comprising land or a building, are also residential premises under paragraph (b) of the definition of residential premises if the premises are intended to be occupied, and are capable of being occupied, as a residence or for residential accommodation, regardless of the term of the intended occupation. This limb of the definition refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the premises.

Premises that display physical characteristics evidencing their suitability and capability to provide residential accommodation are residential premises.

We consider that the villas in specified entity's retirement village meet the definition of residential premises.

In addition we note that:

·   specified entity's premises are not commercial residential premises and

·   specified entity is not supplying premises by way of lease, hire or licence that is a long term lease.

Accordingly, specified entity's supply by way of lease of a villa, in the Village, is input taxed pursuant to section 40-35.