Edited version of private advice

Authorisation Number: 1052060532805

Date of advice: 23 November 2022

Ruling

Subject: GST - supplies of home care services

Question

Are your supplies of home care services to an aged person, GST-free supplies under subsection 38-30(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, to the extent that the home care services you provide are of the kind listed in Part 2 of Schedule 1 of the Quality of Care Principles 2014 (Item 2.1). However, to the extent that you also provide home care services that are not GST-free as listed in the reasons for decision below, you will need to apportion your income from your home care services accordingly to reflect the taxable and GST-free components. Please see the Reasons for Decision for an explanation of this.

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You conduct an enterprise providing home care services and are registered for goods and services tax (GST).

Your turnover from your enterprise exceeds $XXX.

You have one client to whom you provide home care services. Your client is an aged person. Your client is not an NDIS participant. You go to your client's home to provide in-home personal and physical assistance required by an aged person.

You stay overnight and provide one or more of the following services:

• bathing, showering, personal hygiene and grooming;
• maintaining continence or managing incontinence, and using aids and appliances designed to assist continence management;
• eating and eating aids, and using eating utensils and eating aids (including actual feeding if necessary);
• dressing, undressing, and using dressing aids;
• moving, walking, wheelchair use, and using devices and appliances designed to aid mobility, including the fitting of artificial limbs and other personal mobility aids;
• 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.

You do not receive funding from the government for the services you provide.

You provide the services in your client's private home residence.

You have a private arrangement with your client and have a written agreement with your client for you to stay overnight in your client's home to provide the listed home care services to your client.

Payment for your services is made directly to you by your client.

A registered medical practitioner has recommended that there is a continuing need for your client to receive these services.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subsection38-30(3).

Reasons for decision

Subsection 38-30(3) of the GST Act is relevant where the supplier of home care services does not receive any government funding for the care.

Subsection 38-30(3) of the GST Act states that:

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.

To satisfy the elements of this provision, there must be a supply of 'home care' comprising certain services that are 'provided' to one or more aged/disabled people.

'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.

Where you do not receive funding directly from government for your home care services, your supply of any of the home care services listed in Part 2 of Schedule 1 of the Quality of Care Principles 2014 (Item 2.1)to an aged or disabled person is GST-free. Item 2.1 lists the following daily living activities assistance:

However, there are some home care services that are not covered by Item 2.1. Some common examples of services that are not GST-free non-government funded home care are:

• 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.

Supplies with taxable and GST-free components

If you make supplies with separately identifiable GST-free and taxable components, you must identify the component that is GST-free and the component that is taxable, with GST payable on the taxable component.

However, components that are merely incidental to a main supply are treated as part of the main supply, with the GST status being determined by the main supply. Whether a component is merely incidental is a question of fact and degree, and you need to adopt a common-sense approach.

Examples of these two scenarios is provided on our website at Non-government funded home care | Australian Taxation Office (ato.gov.au) which state as follows:

Example - Separately identifiable GST-free and taxable components

Happy Home Help is engaged by Brett, a disabled person, to provide a range of care services for two hours at a total cost of $60 plus any GST. Happy Home Help also charges an administration fee of $10 plus any GST.

Happy Home Help is registered for GST and does not receive a home care subsidy for providing the care nor do they receive any other government funding for the care.

Happy Home Help provides Brett assistance with bathing, personal hygiene and also provide house cleaning services. The bathing and personal hygiene services take one hour and the house cleaning services take one hour.

The care services of bathing and personal hygiene are GST-free non-government funded home care. The house cleaning is not GST-free non-government funded home care.

Happy Home Help would have to apportion the fee charged and account for GST for the house cleaning services. They may do a time-based apportionment, which would result in $30 being for house cleaning services with $3 being added for GST. The remaining $30 would be for GST-free non-government funded home care.

The administration fee is not considered to be for a separate supply of services but instead forms part of the fees charged for the home care services.

The administration fee relates to both the taxable and GST-free services. Happy Help would have to apportion the administration fee and account for GST for the administration services component that relates to the house cleaning services. They may do a time-based apportionment which would result in $5 being for house cleaning services with $0.50 being added for GST. The remaining $5 would relate to GST-free non-government funded home care.

Example - Merely incidental component

Five Star Homecare Pty Ltd is engaged by Albert to provide a range of care services for four hours at a cost of $30 per hour plus any GST.

Five Star Homecare is registered for GST and does not receive a home care subsidy for providing the care nor do they receive any other government funding for the care.

Five Star Homecare's employee, Sari, provides Albert assistance with bathing, personal hygiene, managing incontinence and with his mobility. While Sari is delivering these services, she also assists Albert by mopping the bathroom floor to prevent falls after assisting Albert with bathing. This additional work takes 10 minutes and is not part of the services Five Star Homecare was contracted for. There is no separate charge for assisting with the additional work.

The care services of bathing, personal hygiene, managing incontinence and assistance with mobility are GST-free non-government funded home care. The assistance with housework is not GST-free non-government funded home care.

Ordinarily, Five Star Homecare would have to apportion the fee charged and account for GST for the time assisting Albert with the additional work. A time-based apportionment would result in $5 being for housework with $0.50 being added for GST.

However, in the circumstances, the time spent assisting Albert with the additional work is merely incidental given the total time spent on the additional work compared to the total time that care is being provided.

In this instance, Five Star Homecare can treat the entire supply as GST-free.

Therefore, to the extent that your home care services are of a kind listed in Item 2.1 they are GST-free. However, where you also undertake activities like housework, gardening, preparing meals, etcetera as listed above, these services will be taxable.

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) explains the concept of supplies that have taxable and non-taxable parts referred to as mixed supplies and supplies that appear to have more than one part but are essentially supply of one dominant thing referred to as composite supplies.

We consider that in the scenario where the dominant part of the supply are services that are covered by Item 2.1, for instance Item 2.1(c) "eating and eating aids, and using eating utensils and eating aids (including actual feeding if necessary)", small functions such as wiping up the kitchen bench or heating up food for the aged person are not means in itself to be considered a separate supply, but are incidental to the provision of eating and eating aids including feeding the aged person. However, anything other than minor functions, for example preparing meals and housework, are specifically excluded from Item 2.1 and are taxable supplies in their own right. These supplies would not be considered to be ancillary to the home care services provided under Item 2.1 and you will need to apportion the consideration you receive between the GST-free and taxable components.