ATO ID 2003/997: GST and child care: funded outside school hours care and vacation care services
Date of decision: 25 January 2002
Business line: Indirect Tax

Issue
Is the entity, a child care provider that is eligible to receive funding from the Commonwealth, making a GST-free supply under subdivision 38-D of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities?

Decision
Yes, the entity is making a GST-free supply under subdivision 38-D of the GST Act, when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities. The supply of the extra activities is GST-free under section 38-155 of the GST Act and the supply of the outside school hours care and vacation care services is GST-free under section 38-150 of the GST Act.

Facts
The entity is an organisation registered for goods and services tax (GST). The entity is supplying child care. The entity supplies centre-based child care of outside school hours and vacation care services for which the entity is eligible for Commonwealth funding in respect of that kind of care. The supplies of centre-based child care of outside school hours and vacation care services is of a kind specified in a determination made by the Child Care Minister made for the purposes of subsection 38-150(2) of the GST Act. The entity's outside school hours care service provides recreational programs and activities as well as time for rest and homework. The entity cares for primary school children before and/or after school and/or on 'pupil free' days. The entity's vacation care service provides care and creative indoor and outdoor activities during the school holidays for primary school children. As part of its outside school hours and vacation care service, the entity provides extra activities for the children, for example dancing as part of regularly scheduled 'activity days' and on an ad hoc basis. The entity charges an additional fee, for these extra activities, on top of the normal daily fee. The entity does not offer the extra activities to any child who is not concurrently receiving centre-based child care of outside school hours or vacation care services from the entity. The entity operates in accordance with the child care licensing requirements of the State or Territory in which the child care is supplied.

Reasons for decision
Summary: Section 38-150 of the GST Act states: A reference to the Child Care Minister is a reference to the Minister administering the Child Care Act 1972 and the family assistance law (within the meaning of section 3 of the A New Tax System (Family Assistance) (Administration) Act 1999 . The entity is supplying centre-based child care of outside school hours and vacation care services. The entity is eligible for Commonwealth funding in respect of the child care supplied and the child care supplied is of a kind specified in the Child Care Minister's Determination. Therefore, as the entity's supply of child care satisfies the requirements of section 38-150 of the GST Act, it is GST-free. However, the entity also provides extra activities as part of regularly scheduled 'activity days' and on an ad hoc basis. Section 38-155 of the GST Act states: A supply is GST-free if it is a supply that is directly related to a supply of child care that is: (a) GST-free because of section 38-145 or 38-150; and (b) supplied by, or on behalf of, the supplier of the child care. The extra activities are directly related to a supply of child care as they are offered as part of the entity's supply of the outside school hours care service and its vacation care service. As the entity's supply of child care is GST-free under section 38-150 of the GST Act and the extra activities are directly related to that child care, the supply by, or on behalf of, the entity of the extra activities is GST-free under section 38-155 of the GST Act. Accordingly, the entity is making a GST-free supply under subdivision 38-D of the GST Act, when it supplies extra activities as part of its outside school hours care and vacation care services and charges an additional fee for those activities.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subdivision 38-D section 38-150 section 38-155
Subject references: Goods and services tax GST free GST child care Other child care