Edited version of private advice

Authorisation Number: 1052250565723

Date of advice: 28 May 2024

Ruling

Subject: GST - supplies under an agreement

Question

Are the supplies by Entity A to Entity B under the agreement GST-free under section 38-38 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

This ruling applies for the following period:

XX May 2024 to XX May 2028

The scheme commences on:

Date of issue of ruling

Relevant facts and circumstances

Entity A is registered for goods and services tax (GST). Entity A is a registered charity with the Australian Charities and Not for Profits Commission.

Entity A is not a registered provider with the National Disability Insurance Scheme (NDIS). Entity A does not receive any funding from the NDIS.

Entity B is registered for GST. Entity B is a registered NDIS provider. Entity B only provides NDIS services and only receives NDIS funding.

A copy of an unexecuted General Service Agreement (agreement) was provided.

The agreement provides that the client is Entity B, and the contractor is Entity A.

The agreement provides that:

The client is of the opinion that the contractor has the necessary qualifications, experience and abilities to provide services to the client.

The contractor is agreeable to providing such services to the client on the terms and conditions set out in the agreement.

Tax invoice:

A sample tax invoice was provided. It was issued by Entity A to Entity B.

The amount payable is inclusive of GST.

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 9-40

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

Reasons for decision

In this ruling:

•         unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

•         all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act.

Section 9-40 provides that you must pay the GST payable on any taxable supply that you make.

Taxable supply

You make a taxable supply where you satisfy the requirements of section 9-5, which states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with the indirect tax zone; and

(d) you are *registered, or *required to be registered.

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

In this case the supplies made by Entity A to Entity B under the agreement are made for consideration, are made in the course of the enterprise carried on by Entity A, the supplies take place in the indirect tax zone (Australia) and Entity A is registered for GST. Therefore paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) are satisfied.

Supplies that are GST-free or input taxed are contained in Division 38 and Division 40 respectively.

There are no provisions in Division 40 that would make the supplies by Entity A to Entity B under the agreement input taxed supplies. The next step is to determine whether the supplies under the agreement are GST-free.

Section 38-38

Certain disability supports supplied to NDIS participants are GST-free under section 38-38 where certain requirements are met. One requirement is that the supply is a supply to a participant (within the meaning of the National Disability Insurance Scheme Act 2013) for whom a participant's plan is in effect under section 37 of that Act.

In this case, as Entity B is not an NDIS participant, the supplies of services by Entity A to Entity B under the agreement are not GST-free under section 38-38.

Additionally, based on the information provided, section 38-30 Home care etc, and section 38-25 Residential care etc, will not apply to the services under the agreement.

Summary

As the supplies of the services under the agreement are not GST-free under section 38-38 and the requirements under section 9-5 are met, the supplies under the agreement are taxable supplies.

We have not considered whether the supplies under the agreement are GST-free under 38-250 - Nominal consideration etc.