Edited version of private advice

Authorisation Number: 1051732602980

Date of advice: 07 August 2020

Ruling

Subject: GST and the supply of residential premises by way of lease to people with a disability

Question

Are your supplies of residential premises by way of lease GST-free under section 38-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when they are made:

(a)  directly to persons with a disability within the 'target group' as defined by section 8 of the Disability Services Act 1986 (Commonwealth) (DSAC); or

(b)  to persons with a disability within the 'target group' via an intermediary (such as through a Community Housing Provider (CHP) or a Community Housing Organisation (CHO))?

Answer

Yes. Your supplies of residential premises by way of lease directly, or via an intermediary, to persons with a disability within the 'target group' are GST-free under section 38-40 of the GST Act.

This ruling applies for the following period:

1 July 2016 onwards

Relevant facts and circumstances

You are a government entity registered for GST.

You are governed by a particular State Act and one of your objectives is to provide assistance to people with a disability either directly or through an intermediary.

Many of the disabled person to whom you supply services fall within the definition of 'target group' as defined in section 8 of the DSAC.

To receive your services, people must satisfy certain criteria.

Regardless of whether you make supplies directly to the person with a disability or via an intermediary you have effective control of the process.

Detailed information was provided in relation to the flow of funding to you from both the Commonwealth and State Treasury.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 - section 38-40

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

Reasons for decision

Generally, supplies of residential premises by way of lease are input taxed supplies pursuant to section 40-35 of the GST Act. However, subsection 9-30(3) of the GST Act provides that to the extent that a supply would, apart from this subsection, be both GST-free and input taxed:

·         the supply is GST-free and not input taxed, unless the provision under which it is input taxed requires the supplier to have chosen for its supplies of that kind to be input taxed, or

·         the supply is input taxed and not GST-free, if that provision requires the supplier to have so chosen.

The supply of specialist disability services are GST-free under section 38-40 of the GST Act where the supplier receives funding under the Disability Services Act 1986 (DSAC) or a complementary State or Territory law in respect of the services.

The term 'service' is not defined in the GST Act. The heading to 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'.

Whilst the term 'specialist disability services' is not defined in the GST Act, section 7 of the DSAC provides definitions for 'service' and 'eligible service' as follows:

service includes a service consisting of the supplying of goods, whether or not accompanied by the provision of other services.

eligible service means a service of any of the following kinds:

(a)      accommodation support services;

(b)      independent living training services;

(c)      information services;

(d)      print disability services;

(e)      recreation services;

(f)       respite care services;

(g)      services included in a class of services approved by the Minister under section 9.

Further, the meaning of 'accommodation support services' is provided in section 7 of the DSAC as follows:

accommodation support services means services to assist persons with disabilities to develop or maintain suitable residential arrangements in the community and, without limiting the generality of the foregoing, includes attendant care services, namely, services to persons with disabilities to assist them with personal administration, transport, mobility, transfers, personal hygiene, bathing, grooming, dressing, eating and drinking, and similar personal activities.

Also, the NDA includes the term 'specialist disability services' at paragraph 7 where it provides that the term encompasses services or initiatives specifically designed from time to time to meet the needs of people with disabilities.

As such, 'specialist disability services' are sufficiently broad to encompass the supplies of leased residential premises to persons with a disability.

The DSAC provides at subsection 10(1) 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.

Section 8 prescribes the target group of eligible persons to which the funded services are provided as follows:

8 Target group etc.

(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

(i)        a substantially reduced capacity of the person for communication, learning or mobility; and

(ii)       the need for ongoing support services.

Given the specific facts of this case, and based on the above, the Commissioner is satisfied that you receive funding under the DSAC or under a complementary State or Territory law in respect of the specialist disability services which you provide to persons with a disability within the 'target group' by leasing residential premises directly to them.

Supplies of residential premises through an intermediary

As well as leasing residential premises directly to persons with a disability, you also use intermediaries who sub-lease your residential premises to persons with a disability.

Given the specific facts of this case, and based on the above, the Commissioner is also satisfied that you receive funding under the DSAC or under a complementary State or Territory law in respect of the specialist disability services which you provide to persons with a disability within the 'target group' by facilitating the leasing of residential premises to those persons via an intermediary.

As such, the supply of residential premises by way of lease either directly by you or via an intermediary to persons with a disability within the 'target group' as defined by section 8 of the DSAC, 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.