Private ruling: GST and the supply of community care services
Published: September 2017

Ruling: Q1: Are the supplies of community care services you provide through third parties to targeted persons, GST-free under section 38-30 of the A New Tax System Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supplies of community care services, you provide to targeted persons through third parties are GST-free under section 38-30 of the GST Act where the services are included in Schedule 1 of the GST-free Supply (Care) Determination 2000 (Care Determination). | Q2: Where you subcontract a third party to deliver services to targeted persons on your behalf, have you made a creditable acquisition and are therefore entitled to claim input tax credits? | A2: Yes, where you subcontract a third party to deliver services to targeted persons on your behalf, you have made a creditable acquisition and are entitled to claim input tax credits.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You receive funding from the State through a government department (Department). You provided a Service Agreement between the Department and you. The terms of funding in the Service Agreement define a number of terms. You have confirmed that you are not supplying residential care services for the purposes of section 38-25 of the GST Act. Clients you provide services to are 'targeted persons' for the purpose of the GST-free Care Determination. As well as receiving funding from the Department in connection with the services provided you may require care recipients to contribute to the cost of the services if they can afford to do so.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 7-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 section 38-30 | A New Tax System (Goods and Services Tax) Act 1999 subsection 38-30(3) | A New Tax System (Goods and Services Tax) Act 1999 subsection 38-30(4) | A New Tax System (Goods and Services Tax) Act 1999 section 195-1, and Aged Care Act 1997 section 45-3.

Reasons for decision: Detailed Reasoning - Legislative background: Subsection 7-1(1) of the GST Act provides that GST is payable on taxable supplies and taxable importations. Section 9-5 of the GST Act provides that you make a taxable supply if: You make the supply for consideration The supply is made in the course or furtherance of an enterprise that you carry on The supply is connected with Australia, and You are registered, or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. | Detailed Reasoning - Input taxed supply: On the facts provided, there are no provisions in Division 40 of the GST Act that make your supplies input taxed supplies. | Detailed Reasoning - GST-free supply: Division 38 of the GST Act includes supplies which are GST-free and therefore not taxable supplies. In particular certain community care services are GST-free under section 38-30 of the GST Act. | Detailed Reasoning - Community Care: Community care is a package of personal care services and other personal assistance provided to a person who is not being provided with residential care, that is, care services provided to people in their own homes instead of a nursing home (section 195-1 of the GST Act and section 45-3 of the Aged Care Act 1997 ). Subsection 38-30(1) of the GST Act provides that a supply of community care is GST-free if a community care subsidy is payable under Part 3-2 of the Aged Care Act 1997 to the supplier for the care. Subsection 38-30(2) of the GST Act provides that 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. Subsection 38-30(3) of the GST Act provides that a supply of community care is GST-free if the supply is of services: That are provided to one or more aged or disabled people; and 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. This includes services such as assistance with bathing, eating, personal hygiene dressing, maintaining continence moving, communicating. It does not include hairdressing. The provision of goods including food, associated with these services is not included in the provision so these associated goods will only be GST-free if specified under an alternative provision (for example, medical aids and appliances) A supply of care will also be GST-free under subsection 38-30(4) of the GST Act if: The supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply (paragraph 38-30(4)(a) of the GST Act), and 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 38-30(2) of the GST Act (paragraph 38-30(4)(b) of the GST Act). | Detailed Reasoning - Paragraph 38-30(4)(a) of the GST Act: For the purposes of paragraph 38-30(4)(a) of the GST Act, the supplier must receive funding from the Commonwealth, State or a Territory and that funding must be in connection with the supply. Under the terms of the Service Agreement between you and the Department you receive 'funding' from the Department to deliver the services specified in the Service Agreement. Based on the terms of the Service Agreement you are receiving funding from the State through the Department and that funding is in connection with the supplies of care services. Accordingly, the requirements of paragraph 38-30(4)(a) of the GST Act are satisfied. | Detailed Reasoning - Paragraph 38-30(4)(b) of the GST Act: Paragraph 38-30(4)(b) of the GST Act requires that the supply of care is of a kind determined by the Aged Care Minister to be similar to a GST-free supply because of subsection 38-30(2) of the GST Act. Subsection 38-30(2) of the GST Act deals with those supplies of care that are funded under the Home and Community Care Act 1985 . The Aged Care Minister has made GST-free Supply (Care) Determination 2000 (Care Determination) in this regard which lists in Schedule 1 of the Care Determination those services to a targeted person that are of a kind which are similar to those that are GST-free because of subsection 38-30(2) of the GST Act. The Care Determination defines a 'targeted person' as a frail, older person or a younger person who: Has a moderate, severe or profound disability (including addiction to a drug) lives at home and; Would, in the absence of services of the kind mentioned in Schedule 1 to the Care Determination, be at risk of prematurely or inappropriately needing: Long term care in hospital or other institution or; Residential care within the meaning of the Aged Care Act 1997 . The term 'Care' is defined in the Care Determination as services to enable a targeted person to continue to live at home and 'respite care' as care provided as an alternative care arrangement with the primary purpose of giving a carer or targeted person a short-term break from the usual care arrangement. You advise that the persons to whom you supply care services satisfy the definition of a 'targeted person'. Schedule 1 of the Care Determination lists the following services to targeted persons: Item Service 1 Home help 2 Personal care 3 Home maintenance 4 Home modification 5 Provision of food 6 Provision and delivery of meals at home or at a day care or similar centre 7 Respite care 8 Transport to and from day care or similar centres and for shopping trips, social outings and for health-related purposes 9 Community paramedical services 10 Community nursing 11 Assessment of the persons care needs 12 Referral to other community care services 13 Training in the use of aids and appliances and in how to get the most out of the other services mentioned in this Schedule 14 Individual care planning or case management 15 Provision of basic equipment for social support, excluding the provision of aids and appliances under paragraph 7 (3) (b) of the Schedule to the Home and Community Care Act 1985 16 Day care 17 Linen services 18 Counselling 19 Community advocacy for a purpose mentioned in section 81-1 of the Aged Care Act 1997 20 Medication management 21 Provision and monitoring of personal alert systems 22 Provision of therapeutic supplies and services under the program known as the Psychogeriatric Unit Program administered by the Commonwealth 23 Continence management It would appear on the facts provided that the care services supplied by you and listed in the Service Agreement are covered by those listed in Schedule 1 of the Care Determination. On the facts provided, the supply of care services you provide to targeted persons are of a kind covered by the Care Determination. Accordingly the requirements of paragraph 38-30(4)(b) of the GST Act are satisfied. | Detailed Reasoning - Client Contribution: You have advised that as well as receiving funding from the Department in connection with the services provided clients may be required to make a contribution towards the cost of the services if they can afford to do so. As the requirements of subsection 38-30(4) of the GST Act are satisfied in relation to the services of the kind covered by the Care Determination for which targeted persons (care recipients) may make a contribution, those services are GST-free supplies. | Detailed Reasoning - Subcontracted Services: Care services are generally only GST-free where the contractual recipient of the supply is an individual who receives the services. In this case you, as the Service Provider under the Service Agreement, have engaged a third party to provide services covered by the Service Agreement to targeted persons. You have agreed to pay the third party for these services. There is no contractual relationship between the third party and the care recipient and therefore the third party is not making a GST-free supply of the services to the care recipient. Where the supply from the third party to you satisfies the conditions of section 9-5 of the GST Act, then the third party will be making a taxable supply of services to you on which GST of 1/11 is payable. You, as the Service Provider, are making a GST-free supply of services to the care recipient for which the care recipient may or may not be required to make a contribution. | Detailed Reasoning - Question 2: Division 11 of the GST Act provides that you are entitled to input tax credits for your creditable acquisitions. Section 11-5 of the GST Act states that you make a creditable acquisition if: You acquire anything solely or partly for a creditable purpose The supply of the thing to you is a taxable supply You provide, or are liable to provide, consideration for the supply, and You are registered or required to be registered. Based on your example concerning an acquisition of services you made, we consider that you have made a creditable acquisition for the following reasons: You acquired the services in connection with your enterprise The supply of the services to you would be a taxable supply because the supplier satisfies the conditions of section 9-5 of the GST Act. You provided consideration for this supply, and; You are registered for the GST. Therefore, regardless of whether the care recipient has paid a contribution towards the supply of services, your input tax credit entitlement would be equal to 1/11 of the supply of services provided. However, to claim the input tax credit the supplier will need to have issued you with a tax invoice for this amount.