Edited version of private advice

Authorisation Number: 1052290039817

Date of advice: 12 August 2024

Ruling

Subject: GST and home care services

Question

Is supply of non-government funded home care services by you to an aged or disabled person in their own home, a GST-free supply 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 a kind listed in Part 2 of Schedule 1 of the Quality of Care Principles (QCP) (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.

This ruling applies for the following period:

13 August 2024 to 12 August 2028

Relevant facts and circumstances

You are registered for GST.

You operate an enterprise which involves providing self-funded home care services to people diagnosed with dementia.

The services your business provides include personal care assistance, social and community access, domestic and home help services, case management and specific nursing services.

While not all services are provided at all times to your client, the services are offered to all clients on an 'as needed' basis, determined by the level of supervision and assistance required.

You also provide passive and active sleepover assistance, with, or supervision of, personal tasks of daily living where overnight support is needed, but the home support worker can sleep when not required to provide support.

You do not receive funding from the Commonwealth, a State, a Territory, or a local government in connection with the supply of services you provide to your clients.

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

Reasons for decision

Under section 9-5 of the GST Act, you make a taxable supply if:

(a) You make a 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.

As you are registered for GST and made supplies of home care in the course of an enterprise you carry on in Australia and the supplies of that home care were not input taxed, the issue, in this case, is to what extent those supplies of home care were a GST-free supplies.

Home care services (non-government funded)

Division 38 of the GST Act sets out those supplies that are GST-free. 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.

Item 2.1 of Part 2 of Schedule 1 of the Quality of Care Principles 2014 (QCP) identifies the care or service that must be provided for all care recipients who need them as being 'daily living activities assistance'.

Those activities are:

Personal assistance, including individual attention, individual supervision, and physical assistance, with the following:

(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.

However, there are some home care services that are not covered by Item 2.1. Some common 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, 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.

If you supply social and community activities, it is not GST-free non-government funded home care covered by Item 2.1. However, a supply of GST-free non-government funded home care at a social or community activity is GST-free. The following example is provided to illustrate the difference between a service which involves assisting a person and a service of providing social support:

Example - Assisting a person versus engaging in a social activity

Personal Care Pty Ltd provides care services for residents at Happiness Nursing Home. They provide social outings to lawn bowls and care support for the bowlers.

Their employee, Jan, helps a resident play lawn bowls by helping her to walk, standing beside her and steadying her while she rolls the bowls. This supply is GST-free non-government funded home care as Jan is providing mobility assistance to the care recipient.

Their employee, Errol, drives the residents to lawn bowls and plays with the residents, ensuring everyone is included and has an enjoyable day. This supply is not GST-free non-government funded home care as Errol is providing transport and social support which is not in the list of GST-free non-government funded home care services.

With regards to the first requirement of subsection 38-30(3) of the GST Act, you provide an aged or disabled person with a package of care services in their own home. As such, the first requirement of subsection 38-30(3) of the GST Act is satisfied.

With regards to the second requirement of subsection 38-30(3) of the GST Act, the package of care services you provide includes personal care assistance, social and community access, domestic and home help services, nursing (specific) and case management, as well as passive sleepovers and active sleepovers.

The QCP identifies specific daily living activities that are considered to be "personal assistance, including individual attention, individual supervision, and physical assistance".

Time spent not actively caring for the client, but simply being there to provide services of a kind covered by Item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the QCP as the client requires, will be GST-free.

Similarly, it is considered that where a client requires an attendant carer to be available to provide these services 24-hours a day, the provision of 'sleep over' services will be GST-free.

The activities specifically referenced as personal services such as arranging appointments, organising and collecting mail, correspondence, reading, answering the telephone, door etcetera, monitoring skin integrity and wounds, recording and reporting and documentation and administering medications via Webster Pack will not be GST-free.

Supplies with taxable and GST-free components

The health provisions in Subdivision 38-B of the GST Act are very specific and prescriptive in which types of services are GST-free. Only those health services specified under Item 2.1 are capable of being GST-free under the GST Act.

As you make supplies that are both GST-free and taxable supplies, you will need to apportion the consideration for the supply and work out the GST payable on the taxable part of the supply.

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), describes the characteristics of a supply that contains taxable and non-taxable parts. It refers to such supply as a 'mixed supply'. GSTR 2001/8 also describes the characteristics of a supply that appears to have more than one part but is essentially a supply of one thing. This type of supply is referred to as a 'composite supply'.

A mixed supply is a supply consisting of at least one taxable and one non-taxable part, each of which is separately identifiable. A part of a supply will be recognised as separately identifiable if it is not integral, ancillary or incidental to another part of the supply.

A composite supply is a supply with one identifiable/recognisable part, but also includes another supply that is not recognised in its own right - it is integral, ancillary or incidental to the dominant part of the supply.

GSTR 2001/8 at paragraph 59 explains that no single factor (by itself) will provide the sole test to use to determine whether a part of a supply is integral, ancillary or incidental to the dominant part of the supply. Having regard to all the circumstances, and taking a common sense and practical approach, indicators that a part may be integral, ancillary or incidental include where:

(a) you would reasonably conclude that it is a means of better enjoying the dominant thing supplied, rather than constituting for customers an aim in itself; or

(b) it is necessary or contributes to the supply as a whole, but cannot be identified as the dominant part of the supply; or

(c) it contributes to the proper performance of the contract to supply the dominant part; or

(d) it represents a marginal proportion of the total value of the package compared to the dominant part; or

Further, GSTR 2001/8 states that you may treat a supply as integral, ancillary or incidental to a dominant supply if the consideration for it does not exceed the lesser of:

•         $3.00, or

•         20% of the consideration for the total supply.

The method of apportionment will need to be on a reasonable basis. A reasonable basis will be one which does not favour either the GST-free part, or the taxable part over the other part of the supply.

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.

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.