Private ruling: GST and home care
Date of advice: 22 November 2016
Published: January 2017

Ruling: Q1: Is your supply of home care services to consumers GST-free where you receive a home care subsidy under Part 3.2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 for the care? | A1: Yes, the supply of the home care service will be GST-free under subsection 38-30(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Q2: Where you supply home care services of a kind covered by Item 2.1 of Part 2 of Schedule 1 to the Quality of Care Principles (Item 2.1 daily living activities assistance) to a consumer and the services are not government funded to any extent, are the services GST-free? | A2: Yes. Non-government funded services supplied by you to consumers, that are of a kind covered by Item 2.1 daily living activities assistance are GST-free under subsection 38-30(3) of the GST Act. | Q3: Where you are engaged by another entity (a home care provider that is not an Australian government agency, an insurer or a compulsory third party scheme operator) to deliver home care services of a kind covered by Item 2.1 daily living activities assistance to a consumer, will your supply to that other entity be a GST-free supply? | A3: No, the supply to another entity is not a supply of home care services that is GST-free under subsection 38-30(3) of the GST Act nor is it GST-free under section 38-60 of the GST Act. Rather, it is a supply of contracted services that is taxable, if the further requirements of section 9-5 of the GST Act are met. | Q4: Where you are engaged by an Australian government third party scheme operator (the Operator) to deliver home care services to a consumer, will your supply to the Operator be GST-free? | A4: Yes, your supply to the Operator is GST-free under section 38-60(2) and 38-60(3) of the GST Act to the extent the services to the consumer are of a kind covered by: ● Item 2.1 daily living activities assistance ● the GST-free Supply (Care) Determination 2000, unless you have agreed with the Operator that the supply is not to be treated as a GST-free supply. You advised that you have agreed with the Operator to charge GST for service one and service two and those services are not GST-free. Other services covered by Item 2.1 or by the GST-free Supply (Care) Determination 2000 for which you have not agreed with the Operator to charge GST will be GST-free.

Relevant facts and circumstances: You are registered for GST. You provide a range of home care services to the elderly, people with disabilities and new mothers in their homes. Home Care Packages Programme You are a registered home care provider pursuant to the Aged Care Act 1997 for the purposes of the federal government Home Care Packages Programme (HCPP). You are paid a home care subsidy under the HCCP for a Home Care Package. For each Home Care Package, you enter into a Client Agreement (Home Care Agreement) with a consumer before the Home Care Package commences. You have provided a copy of a document outlining the available services which includes personal care and nursing care. Private Funding Arrangements You provide home care services to consumers under a private arrangement. The types of services are similar to those offered under a Home Care Package. You enter into a Client Agreement (Private Agreement) with the private client. Compulsory Third Party Scheme Operator You are a preferred provider for an Australian government third party scheme operator (the operator). You provide domestic / home services and garden maintenance. You provide attendant care. You don't enter into agreements with consumers. A consumer approaches you with a letter outlining they are approved by the Operator to receive services or alternatively a consumer provides you with a claim number / details and you make enquiries with the Operator on the consumers behalf. The Operator prescribes when you are required to charge GST. The Operator advises you not to charge GST for service three. The Operator advises to charge GST for service one and service two.

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 38-10 | 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

Reasons for decision: Detailed Reasoning - Home Care Packages Programme: Subsection 38-30(1) provides: (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. ‘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. You supply home care services as part of a Home Care Package to a consumer pursuant to a Home Care Agreement between you and the consumer. Where you receive a home care subsidy under Part 3.2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 for a Home Care Package (package of personal care services and other personal assistance) under which you makes supplies to a consumer pursuant to a Home Care Agreement, the supply is GST-free under subsection 38-30(1). ATO Interpretative Decision ATO ID 2003/13 Goods and services tax: GST and supply of community care for a fee provides that an entity makes a GST-free supply under subsection 38-30(1) when it supplies care services, in respect of which the entity receives a community care subsidy, to an aged person in their own home and charges the aged person a fee for those services. If pursuant to the Home Care Agreement with a consumer, you receive a co-payment from the consumer in relation to government funded services supplied under a Home Care Package, that payment will form part of the consideration for the GST-free home care services supplied under subsection 38-30(1). This would also be the case where pursuant to the Home Care Agreement with a consumer, you receive a private payment from the consumer in relation to a pooled package of government funded services supplied under a Home Care Package. | Detailed Reasoning - Non-government subsidised/funded services: Pursuant to the Client Agreement with a consumer, you receive a private payment from the consumer in relation to home care services but no home care subsidy is received. Subsection 38-30(3) states: 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. Part 2 of Schedule 1 of the Quality of Care Principles 2014 states the following items of daily living activities assistance (Item 2.1): | Detailed Reasoning - Content: 2.1 Daily living activities assistance 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. Excludes hairdressing. The Charities consultative committee resolved issues document (search for ‘QC 27139’ on the ATO website) lists the following services that are not covered by Item 2.1: ● assistance with housework ● assistance with gardening ● meal preparation services ● grocery shopping for individuals ● monitoring medication ● rehabilitation services ● assistance with writing cheques, letters, etc ● advocacy services ● provision of social and community activities, such as providing companionship, craft and reading activities to individuals, and ● driving individuals to and from appointments. Where your home care services are of a kind covered by Item 2.1 daily living activities assistance and are supplied to aged or disabled people the supply will be GST-free. There is no requirement in subsection 38-30(3) that the supplier receives a subsidy or funding from the government in respect of the care services you supply. Alternatively, the supply may be GST-free under subsection 38-10(1) which provides: A supply is GST-free if: (a) it is a service of a kind specified in the table in this subsection, or of a kind specified in the regulations; and (b) the supplier is a *recognised professional in relation to the supply of services of that kind; and (c) the supply would generally be accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the * recipient of the supply. | Detailed Reasoning - Service: 1 Aboriginal or Torres Strait Islander health 2 Acupuncture 3 Audiology, audiometry 4 Chiropody 5 Chiropractic 6 Dental 7 Dietary 8 Herbal medicine (including traditional Chinese herbal medicine) 9 Naturopathy 10 Nursing 11 Occupational therapy 12 Optometry 13 Osteopathy 14 Paramedical 15 Pharmacy 16 Psychology 17 Physiotherapy 18 Podiatry 19 Speech pathology 20 Speech therapy 21 Social work Where you provide a package of ‘non-government funded/subsidised’ home care services that includes home care services of a kind not covered by Item 2.1 or that are not otherwise GST-free, then those items will generally be taxable. Where you supply a package of care that is partly GST-free and partly taxable, you will be making a mixed supply and it will be necessary to apportion between the GST-free and taxable amounts. 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 provides methods and examples that you may use to help you work out how to apportion the consideration for a supply that contains separately identifiable taxable and non-taxable parts. | Detailed Reasoning - Brokered / subcontracted services: Subsection 38-30(3) of the GST Act provides: 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. In the scenario being considered, you supply the service to Entity A of providing the stipulated services to the client of Entity A. The issue to be resolved is whether the supply you make to Entity A is a supply of ‘home care’. ‘Home care’ is defined by reference to the GST Act and the Aged Care Act 1997 1 as care consisting of a package of personal care services and other personal assistance to be provided to a person who is not being provided with residential care. The term ‘care’ 2 is defined to mean services, or accommodation and services, provided to a person whose physical, mental or social functioning is affected to such a degree that the person cannot maintain himself or herself independently. From these definitions, a supply of ‘home care’ must be made to an individual to support their physical, mental or social functioning. Although the definitions of ‘home care’ and ‘care’ referred to above use the term ‘provided’, we consider that the context of the provisions in the Aged Care Act 1997 shows that the term ‘provided’ is consistent with the term ‘supply’ in the GST Act. On this basis, ‘home care’ is not supplied to an entity carrying on a business (Entity A) where the supply is a service of providing the home care services to an individual client of that entity (Entity A). In this instance, the entity carrying on the business (Entity A) is not being supplied ‘home care’ by you. You will accordingly make a taxable supply to Entity A. Assuming that Entity A is registered for GST and acquires the services from you in carrying on its enterprise, Entity A makes a creditable acquisition under section 11-5 of the GST Act from you for which it is entitled to an input tax credit. This view is consistent with paragraph 155 of Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies which states that: “Under the GST health provisions in Subdivision 38-B, subject to certain exceptions..., the supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. This outcome results from the specific wording in some health provisions, whilst in other provisions it is due to the nature of the services themselves. This means that a GST-free supply of a health service cannot be made to a business entity or a non-profit body.” Further, as Entity A is a home care provider that is not an Australian government agency, an insurer or a compulsory third part scheme operator, the supply will not be GST-free under section 38-60. | Detailed Reasoning - Supplies to third party scheme operators: Subsection 38-30(4) provides that 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). The Aged Care Minister has made the GST-free Supply (Care) Determination 2000 (Care Determination). The Care Determination provides that for the purposes of paragraph 38-30(4)(b), the supply of care of a kind mentioned in Schedule1 to a targeted person is similar to a supply that is GST-free because of subsection 38-30(2). Schedule 1 to the Care Determination states the following items of care provided to targeted persons: | Detailed Reasoning - 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 person’s 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 The ATO understands that the compulsory third part scheme operator (the Operator) is an Australian government agency. On that understanding, it is administratively accepted that the Operator is ‘a State’ and the payment from the Operator is funding for the purposes of this provision. However the supply to the Operator is not ‘care’ as care can only be supplied to an individual. A business entity cannot be supplied with care. Therefore your supplies to the Operator do not satisfy the requirements of subsection 38-30(4). However, subsections 38-60(2), (3) and (4) state: | Detailed Reasoning - Compulsory third party scheme operators: (2) If: (a) a supply is a supply of a service to an *operator of a *compulsory third party scheme; and (b) the service is the supplier making one or more other supplies of goods or services to an individual; and (c) at least one of the other supplies is: (i) wholly or partly *GST-free under this Subdivision; and (ii) made under the compulsory third party scheme; the first-mentioned supply is GST-free to the extent that the other supplies mentioned in paragraph (b) are GST-free under this Subdivision. | Detailed Reasoning - Government agencies: (3) If: (a) a supply is a supply of a service to an *Australian government agency; and (b) the service is the supplier making one or more other supplies of goods or services to an individual; and (c) at least one of the other supplies is wholly or partly *GST-free under this Subdivision; the first-mentioned supply is GST-free to the extent that the other supplies mentioned in paragraph (b) are GST-free under this Subdivision. | Detailed Reasoning - Parties may agree for supply not to be GST-free: (4) However, a supply is not GST-free (to any extent) under this section if the supplier and the *recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies. For the purposes of subsection 38-60(3), an Australian government agency is defined pursuant to section 195-1 of the GST Act and section 995-1 of the Income Tax Assessment Act 1997 as: (a) the Commonwealth, a State or a Territory; or (b) an authority of the Commonwealth, a State or a Territory. As stated previously, the ATO understands that the Operator is an Australian government agency. Under the contract with the Operator, you are making the supply of the service of making a supply of goods and/or services to an individual noting that you are notified by the Operator which clients are to receive the services. The same reasoning as stated previously in respect of subsection 38-30(4) applies with the exception that the underlying supply you make to the individual is a supply of ‘care’ for the purposes of that provision. In this situation, the reference to subsection 38-30(4) is relevant as the Operator is an Australian government agency and its payment to you would constitute funding by the State. The supply under your arrangement with the Operator is GST-free under section 38-60(3) of the GST Act to the extent the services are of a kind covered by: ● Item 2.1 daily living activities assistance ● the GST-free Supply (Care) Determination 2000 unless you have agreed with the Operator that the supply is not to be treated as a GST-free supply. Your arrangement with the Operator requires you to treat some supplies as taxable. Accordingly, these supplies are not GST-free pursuant to 38-60(4). Where the operator of a compulsory third party scheme is not an Australian government agency, the supply to that operator will be only GST-free under subsection 38-60(2) to the extent that you to make a supply to a care recipient that is GST-free under subsection 38-30(3) where it is made under the compulsory third party scheme and provided that you have not agreed with the operator for the supply not to be GST-free. The same reasoning as stated previously in respect of subsection 38-30(3) under Question 2 applies to the service you are making to an individual for the Operator. 1 The term ‘home care’ is defined in section 195-1 of the GST Act to take the meaning given in section 45-3 of the Aged Care Act 1997 . 2 The term ‘care’ for the purposes of subsection 45-3(1) of the Aged Care Act 1997 is defined in Schedule 1 of the Aged Care Act 1997.

● unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) | ● all terms marked by an asterisk are defined terms in the GST Act | ● all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on ato.gov.au