Edited version of private advice

Authorisation Number: 1052134490670

Date of advice: 29 June 2023

Ruling

Subject: GST - supplies of home care services

Question 1

Are the supplies of home care services by You to an aged person under a brokerage agreement where you provide these services on behalf of another entity, GST-free supplies under section 38-30 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

No, your supply of home care services is not GST-free under section 38-30 of the GST Act when provided on behalf of another entity as part of a brokerage agreement. They are therefore a taxable supply under section 9-5 of the GST Act.

However, to the extent that personal care/assistance services that you provide directly to an Australian government agency and the service is you making one or more other supplies of goods and services to an individual and the supply of those services are GST- free under subdivision 38-B, the personal care/assistance would be considered GST-free under subsection 38-60(3) of the GST Act

Question 2

If a client receives a government home care package but self manages their plan, would the supply of home care services to an aged person by you, under a brokerage agreement where you provide these services on behalf of another entity, be GST-free under section 38-30 of the GST Act?

Answer 2

No, your supply of home care services is not GST-free under section 38-30 of the GST Act when provided to a client who self manages their plan as it still provided on behalf of another entity under a brokerage agreement. They are therefore a taxable supply under section 9-5 of the GST Act.

However, to the extent that personal care/assistance services that you provide directly to an Australian government agency and the service is you making one or more other supplies of goods and services to an individual and the supply of those services are GST- free under subdivision 38-B, the personal care/assistance would be considered GST-free under subsection 38-60(3) of the GST Act

Question 3

Is providing of home care services to Aged Care clients for a once off service fee under the brokerage agreement where you provide these services on behalf of another entity, a GST-free supply under section 38-30 of the GST Act?

Answer 3

No, your supply of home care services is not GST-free under section 38-30 of the GST Act when provided for a once off service fee on behalf of another entity as part of a brokerage agreement. They are therefore a taxable supply under section 9-5 of the GST Act.

However, to the extent that personal care/assistance services that you provide are under a contract you sign with an Australian government agency (not as part of a brokerage agreement) and the service is you making one or more other supplies of goods and services to an individual and the supply of those services are GST- free under subdivision 38-B, the personal care/assistance would be considered GST-free under subsection 38-60(3) of the GST Act.

This ruling applies for the following periods:

1 July 2021 to 30 June 2022

1 July 2022 to 30 June 2023

1 July 2023 to 30 June 2024

1 July 2024 to 30 June 2025

1 July 2025 to 30 June 2026

The scheme commences on:

29 June 2023

Relevant facts and circumstances

•         You are registered for GST effective 1 July 2021.

•         You have recently become a registered NDIS Provider.

•         You do not receive any government funding.

•         You currently have approximately XX ongoing regular NDIS Clients and XX ongoing regular Aged Care participants to whom you provide daily support and domestic support. You also have multiple privately funded Clients, both NDIS and Aged Care.

•         You have brokerage agreements with most of the largest Aged Care providers in the City.

•         You have a contract with a government agency to provide services to participants under their care.

•         All clients you service regularly are on behalf of the above listed companies and who have signed a service agreement with your company. You also provide service of once off domestic cleaning under these brokerage agreements.

•         Based on contracts provided by you for this private ruling, these brokerage agreements include:

-       Details of Aged Care provider

-       Term of contract

-       Services to be provided

-       Training and other requirements

-       Insurance details

-       Governing jurisdiction

-       Fee schedule

•         Although your Aged Care clients are brokered through their package providers, you have direct contact liaising with the clients for their services and ongoing care.

•         Services you offer to your current clients, both NDIS and Aged Care, are as followed:

-       Cleaning Services / Housekeeping

-       Personal Care / assistance

-       Meal Preparation

-       Social Support

-       Supported Independent Living

-       Respite

-       Transportation

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 38-30

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

A New Tax System (Goods and Services Tax) Act 1999 Section 195

Aged Care Act 1997.

Reasons for decision

Section 38-30 of the GST Act states:

38-30 Home care etc.

(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).

It follows that the supply of home care may be a GST-free where certain requirements are met. Relevantly for government funded home care this may arise where the home care subsidy or government funding is payable to the supplier (i.e., you) for the care.

In this case you do not receive any funding directly from government and therefore do not meet the requirements for a GST-free supply of government funded home care. However, the supply you make may be GST-free where it satisfies the conditions as non-government funded home care.

In the case of non-government funded home care this will be GST-free where:

•         You make the supply to an aged or disable person and

•         The service is of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles (QCP).

Item 2.1 of the QCP covers services which involve personal assistance, including individual attention, individual supervision, and physical assistance with the following daily living activities:

(a)        bathing, showering, personal hygiene and grooming;

(b)        maintaining continence or managing incontinence, and using aids and appliances designed to assist continence management;

(c)        eating and eating aids, and using eating utensils and eating aids (including actual feeding if necessary);

(d)        dressing, undressing, and using dressing aids;

(e)        moving, walking, wheelchair use, and using devices and appliances designed to aid mobility, including the fitting of artificial limbs and other personal mobility aids;

(f)         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.

The Commissioner's view in considering the GST treatment and home care services is of the view that some home care services that are not funded and are not GST-free, are:

• hairdressing
• housework and gardening
• preparing means 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, these 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

Given the information provided, the services you offer include services that are included in the list above and are not GST-free non-government funded home care. These include meal preparation, transportation, housework and respite care.

Recipient of Supply

Section 195-1 of the GST Act defines 'recipient' in relation to a supply to mean 'the entity to which the supply was made'. Where there are only two parties to an arrangement (the supplier of the home care services and the aged or disabled person), the recipient of the supply is the aged or disabled person. However, where there is a third party involved and the third party is the payer, the third party may also be the recipient of a supply. Therefore, in order to determine the GST status of the supplies under the agreement, it is necessary to determine whether the third party is the recipient of a supply.

The brokerage agency will be the recipient of a supply where:

•         the brokerage agency engages you to make, or to be available to make, a supply to them or to someone else;

•         the brokerage agency, by agreement with you, determines the nature of the supply to be made to them or to someone else; and

•         there is a binding obligation between the brokerage agency and you for the supply and the brokerage agency is liable to provide payment.

The written agreement between you and the brokerage agency specifies the nature of the services that are to be made and creates a binding obligation for the provision of the personal care services by you and for payment by the brokerage agency.

Therefore, the brokerage agency is the recipient of the supply of professional services.

Subcontracted services

Your home care services are generally only GST-free if the other contracting party for the supply is either an:

•         individual who receives the care

•         insurer, compensation operator or government agency.

If you are contracting with another entity to deliver home care services on behalf of that other entity to a care recipient, your supply to that other entity is generally not GST-free.

Supply made to a government agency

Your supply may be GST-free under subsection 38-60(3) of the GST Act if you supply services directly to:

•         ...

•         an Australian government agency, being the Commonwealth, a State or a Territory or an authority of the Commonwealth, a State or a Territory (including local government).

The supply to any of the above levels of government is GST-free to the extent that the underlying service you provide to the care recipient is a GST-free health service. However, you can agree with a government agency not to treat the supply to them as GST-free.

Section 9-5 of the GST Act states that a supply is a taxable supply if the supply is:

•         made for consideration, and

•         the supply is in the course of furtherance of an enterprise of the supplier, and

•         the supply is connected with Australia, and

•         the supplier is registered or should register for GST.

However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.

The supply you make to the brokerage agency is for consideration, the supply is in furtherance of your enterprise, the supply is connected with Australia, and you are registered for GST. Furthermore, the supply is neither GST-free under any provision in Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.

Therefore, you are making a taxable supply under section 9-5 of the GST Act when you provide home care services pursuant to an agreement between you and a brokerage agency for the provision of those services.

When the supply is made to a government agency however, the supply is considered to be GST-free under subsection 38-60(3) of the GST Act, to the extent that the supply of the service by you to an aged or disabled person in their own home involves providing personal assistance with a daily living activity of a kind covered Item 2.1 of the QCP.