Private ruling: GST and home care
Date of advice: 22 August 2018
Published: October 2018

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 (Home Care Subsidy) 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). However, where a home visit is a companionship visit, the supply of the service will not be GST-free as companionship visits are not considered to be the provision of care. | Q2: Is your supply of the home care services to consumers GST-free where you receive government funding (other than a Home Care Subsidy) in connection with the supply? | A2: Yes, the supply of the home care service will be GST-free under subsection 38-30(2) of the GST Act in respect of services for which you receive funding under the Home and Community Care Act 1985 (HACC) in connection with the supply. However, the supply will not be GST-free home care under subsection 38-30(2) of the GST Act for services in excess of that for which the HACC funding relates unless: ● other government funding relates to the services; or ● the services are GST-free under subsection 38-30(3) as discussed in relation to question 3. However, where a home visit is a companionship visit, the supply of the service will not be GST-free as companionship visits are not considered to be the provision of care. Yes, the supply of the home care service under the Commonwealth Home Support Programme (CHSP) will be GST-free under subsection 38-30(4) of the GST Act to the extent the services are of a kind covered by the GST-free Supply (Care) Determination 2017 . However, the supply will not be GST-free home care under subsection 38-30(4) of the GST Act for services in excess of that for which the CHSP funding relates unless: ● other government funding relates to the services; or ● the services are GST-free under subsection 38-30(3) as discussed in relation to question 3. However, where a home visit is a companionship visit, the supply of the service will not be GST-free as companionship visits are not considered to be the provision of care. | Q3: Where you supply home care services of a kind covered by Item 2.1 (daily living activities assistance) 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? | A3: 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. | Q4: 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 to that entity’s client, will your supply to that other entity be a GST-free supply? | A4: 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. If you receive a payment from the other entity’s client, this forms part of the consideration for the taxable supply that you make to the other entity. | Q5: Where you are engaged by another entity that is an Australian government agency, an insurer or a compulsory third party scheme operator to deliver home care services, will your supply to that other entity be a GST-free supply? | A5: Yes, your supply under an arrangement with an Australian government agency 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 and provided by you to an aged or disabled person, or ● the GST-free Supply (Care) Determination 2017 and provided by you to a targeted person, unless you have agreed with the other entity that the supply is not to be treated as a GST-free supply. Where you and the other entity agree to treat your supplies as taxable, these supplies are not GST-free, pursuant to 38-60(4) of the GST Act. Your supply under your arrangement with an insurer or a compulsory third party scheme operator is GST-free under section 38-60(1) or (2) respectively of the GST Act to the extent the services are of a kind covered by: ● Item 2.1 daily living activities assistance and provided by you to an aged or disable person unless you have agreed with the other entity that the supply is not to be treated as a GST-free supply. Where you and the other entity agree to treat your supplies as taxable, these supplies are not GST-free, pursuant to 38-60(4) of the GST Act.

Relevant facts and circumstances: You are registered for GST. You are an approved provider under the Aged Care Act 1997 to provide home care services to aged and disabled people. You receive a subsidy from the Australian Government to provide home care services to eligible persons through the Home Care Packages Program (HCPP). You also receive funding to provide services through the Western Australian Home and Community Care (HACC) Program. Home Care Packages Program (HCPP) The Australian Government has responsibility for the HCPP: ● To assist people to remain living in their home. ● To enable consumers to have a choice and flexibility in the way that the consumer’s aged care and support is provided at home. There are four levels of Home Care Packages: ● Home Care Level 1 — a package to support people with basic care needs. ● Home Care Level 2 — a package to support people with low level care needs. ● Home Care Level 3 — a package to support people with intermediate care needs. ● Home Care Level 4 — a package to support people with high care needs. In order to access a Home Care Package (HCP), an individual needs to be assessed and approved as eligible for home care by an Aged Care Assessment Team (ACAT). Once the individual has been offered a HCP, they will approach a service provider (such as you) to organise care. You subsequently meet with the individual and a Home Care Agreement (agreement) is put in place. The agreement will detail the particular services, the amount of each service and the cost. You will enter the consumer’s (the individual’s) unique number into the MyAgedCare system and the Medicare system. You are then funded automatically each month – subject to confirming the supply of the care and any adjustments for things such as respite care or hospitalisation of the consumer. The Medicare system automatically adjusts for changes in ACAT levels. The MyAgedCare system and the Medicare system are linked. The funding components for a package can include: 1. Government funding: ● Government Subsidy (Home Care Package) for example $40.65 per day for a Level 2 package. ● Home care package supplements, for example the oxygen supplement. 2. Client Agreed Additional Contribution (Co-payment): ● Means tested contribution from the consumer. This will be $0 for a consumer who is receiving a full pension. It will be more for someone receiving a part pension. This cannot be waived by you. The government funding is reduced by this amount. ● Daily service charge 17.5% of the pension – this amount can be reduced or waived by you. 3. Private payment / Top up payment from the consumer. Where funding components 1 and 2 do not provide sufficient resources to pay for the services required, the consumer may elect to provide additional funds from their own resources. You combine a consumer’s funding components into a single pool of funds for that consumer. Your service provision expenses and monthly administration fee are paid from this pool. You maintain a separate sub account for each consumer. The top up payments from the consumer form part of the total funding components for that consumer’s HCP and are not allocated/reconcilable to a specific/separate service. The services offered to each consumer as part of a HCP are intended to be flexible and consistent with the consumer’s needs. The Quality of Care Principles 2014 specify the services that an approved provider of a home care service may provide and also specify excluded items that must not be included in a HCP. You provide the following care services: ● Personal services, including showering, toileting and grooming. ● Help at home - meal preparation. You provide the following support services: ● Community Day Clubs (previously known as Adult Day Centres) ● Day club – in centre (including transport). ● Mobile day club. ● Men’s shed. ● Transport for Mobile day club and Men’s shed. Shopping: ● Group shopping bus (return or one way). ● One on one accompanied shopping. ● Shopping by list (staff shop, deliver to consumer and put away). ● Help at home - domestic assistance. ● Help at home – transport for social activities (visiting, café), shopping, or medical appointments. ● Home delivered meals (meal, additional course, delivery). ● Medical transport. ● Medication prompts. ● Home maintenance. ● Companionship visits. ● Wellbeing check (to ensure the wellbeing and safety of clients should they not be home for a scheduled service, or if they are ill or have an emergency situation that requires liaising with emergency contacts and/or engagement of emergency services on their behalf). ● Respite care. You also charge consumer’s for the following: ● Administration Fee (xx% of Home Care Package annual amount.) ● Case Management Fee (Advisory and care co-ordination fee for managing a consumer’s HCP account for the month - $xx). ● Establishment Fee (for the assessment of care needs or individual care planning or case management - $xx). ● Service Cancellation Fee, for example where a consumer gives insufficient notice that a service is not required – full service fee. ● Surcharges, for evenings, public holidays, Saturdays, Sundays – various. ● Exit fee to consumers permanently leaving your service. ($xx) Western Australia Home and Community Care Program (HACC) You are a HACC provider with a funding agreement with the Western Australian Department of Health. You receive funding through the program (a joint funding initiative of the Australian and WA State Governments) to provide agreed amounts of specified services to persons aged 65 and over, for example 500 hours of domestic assistance. Each service has its unique code. You must proactively supply the services to eligible consumers. Consumers are requested to make a financial contribution. The government funding and the consumer contributions are pooled, with no separate sub accounts for each consumer. Your services are provided directly to clients and you do not use third party providers. An individual is assessed by the Regional Assessment Service (RAS) and is determined to be eligible for specified quantities of the specified services. The individual will contact a service provider to acquire the services – not necessarily all from the one provider. Where you are selected as the service provider you are paid by submitting a claim detailing the unique identifier for the consumer (the individual), the code for the service and the quantity of the services provided. A consumer with a HCP can use their HCP funding to acquire HACC services, where it is listed in their agreement. If they wish to acquire a HACC service, they are required to pay full fees. That is, none of the HACC funding will apply to that particular supply but the consumer with a HCP can use their individualised budget to pay for the HACC services. Services you provide include: ● Community Food Services (previously known as Meals on Wheels) ● Home delivered meals (meal, additional course, delivery). ● Community Day Clubs (previously known as Adult Day Centres) ● Day club – in centre (including transport). ● Meal fee at centre. ● Mobile day club. ● Men’s shed. ● Transport for Mobile day club and Men’s shed. ● Outings (individually charged based on outing). Shopping: ● Group shopping bus (return or one way). ● One on one accompanied shopping. ● Shopping by list (staff shop, deliver to consumer and put away). Help at home: – Domestic assistance. – Meal preparation. ● Medical transport. ● Medication prompts. ● Personal care, including showering, toileting and grooming. ● Respite care. ● Help with shopping. ● Help to access support groups. ● Help to access recreational activities. ● Companionship at home. You also supply meals (Community Food Services) for clients of other councils: ● You charge the other Council a $xx delivery fee. ● You charge the consumer (client of other council) directly for the meal. Other charges: ● Cancellation / call out fee, for example where a consumer gives insufficient notice that a service is not required. Commonwealth Home Support Programme (CHSP) You will be moving from HACC to CHSP from 1 July 2018. The administrative arrangements for CHSP are broadly the same as for HACC. HACC clients aged 65 and over will be moved to CHSP. From 1 July 2019, HACC clients aged less than 65 will be moved to the National Disability Insurance Scheme (NDIS) – subject to prior assessment. Those not eligible for either CHSP or NDIS will stay on HACC (or an equivalent) until their needs increase to a level where they are eligible for NDIS, or reach the age of 65 and move to CHSP.

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 | A New Tax System (Goods and Services Tax) Act 1999 Section 38-60 | A New Tax System (Goods and Services Tax) Act 1999 Section 195

Reasons for decision: Detailed Reasoning - Home Care Packages Program: Subsection 38-30(1) provides: 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. Under section 195-1, ‘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. 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, 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. 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. Under section 13 of the Quality of Care Principles 2014 , an approved provider of a home care service must provide a package of care and services selected from the care and services specified in Part 1 of Schedule 3. The care recipient (consumer) and the approved provider may also agree to include other care and services required to support the consumer to live at home, provided they can be provided within the limits of the resources available and they are not excluded items. These services form part of the care plan under the Home Care Agreement. 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 make supplies to a consumer pursuant to a Home Care Agreement, the supply is GST-free under subsection 38-30(1). However, where a service does not form part of a Home Care Agreement or is not permitted to form part of a Home Care Agreement, it will not be GST-free under subsection 38-30(1). For example, food is an excluded item for the purposes of home care package services. As such, the food component of delivered meals is not GST-free under subsection 38-30(1) but the preparation and delivery service can be 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 that forms part of the total funding components for that consumer’s Home Care Package. Part 1 of Schedule 3 to the Quality of Care Principles 2014 lists the care services, support services and clinical services that an approved provider of a home care service may provide. | Detailed Reasoning - Column 2 Content: 1 Personal services Personal assistance, including individual attention, individual supervision and physical assistance, with: (a) bathing, showering including providing shower chairs if necessary, personal hygiene and grooming, dressing and undressing, and using dressing aids; and (b) toileting; and (c) dressing and undressing; and (d) mobility; and (e) transfer (including in and out of bed). 2 Activities of daily living Personal assistance, including individual attention, individual supervision and physical assistance, with communication including assistance to address difficulties arising from impaired hearing, sight or speech, or lack of common language, assistance with the fitting of sensory communication aids, checking hearing aid batteries, cleaning spectacles and assistance in using the telephone. 3 Nutrition, hydration, meal preparation and diet Includes: (a) assistance with preparing meals; and (b) assistance with special diet for health, religious, cultural or other reasons; and (c) assistance with using eating utensils and eating aids and assistance with actual feeding, if necessary; and (d) providing enteral feeding formula and equipment. 4 Management of skin integrity Includes providing bandages, dressings, and skin emollients. 5 Continence management Includes: (a) assessment for and, if required, providing disposable pads and absorbent aids, commode chairs, bedpans and urinals, catheter and urinary drainage appliances and enemas; and (b) assistance in using continence aids and appliances and managing continence. 6 Mobility and dexterity Includes: (a) providing crutches, quadruped walkers, walking frames, walking sticks and wheelchairs; and (b) providing mechanical devices for lifting, bed rails, slide sheets, sheepskins, tri-pillows, and pressure relieving mattresses; and (c) assistance in using the above aids. | Detailed Reasoning - Column 2 Content: 1 Support services Includes: (a) cleaning; and (b) personal laundry services, including laundering of care recipient’s clothing and bedding that can be machine-washed, and ironing; and (c) arranging for dry-cleaning of care recipient’s clothing and bedding that cannot be machine-washed; and (d) gardening; and (e) medication management; and (f) rehabilitative support, or helping to access rehabilitative support, to meet a professionally determined therapeutic need; and (g) emotional support including ongoing support in adjusting to a lifestyle involving increased dependency and assistance for the care recipient and carer, if appropriate; and (h) support for care recipients with cognitive impairment, including individual therapy, activities and access to specific programs designed to prevent or manage a particular condition or behaviour, enhance quality of life and provide ongoing support; and (i) providing 24-hour on-call access to emergency assistance including access to an emergency call system if the care recipient is assessed as requiring it; and (j) transport and personal assistance to help the care recipient shop, visit health practitioners or attend social activities; and (k) respite care; and (l) home maintenance, reasonably required to maintain the home and garden in a condition of functional safety and provide an adequate level of security; and (m) modifications to the home, such as easy access taps, shower hose or bath rails; and (n) assisting the care recipient, and the homeowner if the home owner is not the care recipient, to access technical advice on major home modifications; and (o) advising the care recipient on areas of concern in their home that pose safety risks and ways to mitigate the risks; and (p) arranging social activities and providing or coordinating transport to social functions, entertainment activities and other out-of-home services; and (q) assistance to access support services to maintain personal affairs 2 Leisure, interests and activities Includes encouragement to take part in social and community activities that promote and protect the care recipient’s lifestyle, interests and wellbeing. | Detailed Reasoning - Column 2 Content: 1 Clinical care Includes: (a) nursing, allied health and therapy services such as speech therapy, podiatry, occupational or physiotherapy services; and (b) other clinical services such as hearing and vision services. 2 Access to other health and related services Includes referral to health practitioners or other related service providers Part 1 of Schedule 3 to the Quality of Care Principles 2014 also lists items that must not be included in the package of care and services provided under section 13. | Detailed Reasoning - Column 2: 1 Excluded items The following items must not be included in the package of care and services provided under section 13: (a) use of the package funds as a source of general income for the care recipient; (b) purchase of food, except as part of enteral feeding requirements; (c) payment for permanent accommodation, including assistance with home purchase, mortgage payments or rent; (d) payment of home care fees; (e) payment of fees or charges for other types of care funded or jointly funded by the Australian Government; (f) home modifications or capital items that are not related to the care recipient’s care needs; (g) travel and accommodation for holidays; (h) cost of entertainment activities, such as club memberships and tickets to sporting events; (i) gambling activities; (j) payment for services and items covered by the Medicare Benefits Schedule or the Pharmaceutical Benefits Scheme. You will make a GST-free supply of home care under section 38-30(1) when you supply the following care services, where they are listed in your home care agreement with the consumer and paid for from the Home Care Package (HCP): ● Personal services, including showering, toileting and grooming - GST-free as it is listed in item 1 of care services (personal services). ● Help at home (meal preparation) - GST-free as it is listed in item 3(a) of care services (nutrition). Note: You will not make a GST-free supply under section 38-30(1) when you supply: ● Food items - This will be a taxable supply, as it is an excluded item – (Item b). You will make a GST-free supply of home care under section 38-30(1) when you supply the following support services, where they are listed in your home care agreement with the consumer and paid for from the HCP: ● Community Day Clubs (previously known as Adult Day Centres): ● Day club – in centre (including transport). ● Mobile day club. ● Men’s shed. ● Transport for Mobile day club and Men’s shed. GST-free as it is listed in item 1(p) of support services (arranging social activities). Shopping: ● Group shopping bus (return or one way). ● One on one accompanied shopping. ● Shopping by list (staff shop, deliver to consumer and put away). GST-free as it is listed in item 1(j) of support services (transport and personal assistance). ● Help at home (domestic assistance) - GST-free as it is listed in item 1 – (support services). ● Help at home (transport for social activities (visiting, café), shopping, or medical appointments) - GST-free as it is listed in item 1(j) of support services (transport and personal assistance). ● Home delivered meals (administration cost) - the preparation will be GST-free as it is covered by item 3(a) of care services (nutrition). Note: Home delivered meals (food cost) - The food content of the home delivered meal will not be a GST-free supply as it is an excluded item under Part 1 of Schedule 3 to the Quality of Care Principles 2014 . ● Medical transport - GST-free as it is listed in item 1(j) of support services (transport and personal assistance). ● Medication prompts - GST-free as it is listed in item 1(e) of support services (medication management). ● Home maintenance - GST-free as it is listed in item 1(l) of support services (home maintenance). ● Wellbeing check (to ensure the wellbeing and safety of clients should they not be home for a scheduled service, or if they are ill or have an emergency situation that requires liaising with Emergency contacts and/or engagement of Emergency services on their behalf) - GST-free where it is part of care co-ordination and arranging for care services to be delivered and forms part of home care. ● Respite care - GST-free as it is listed in item 1(k) of support services (respite care). Note: You will not make a GST-free supply under section 38-30(1) when you supply: ● Companionship visits - the supply of the service will not be GST-free as companionship visits are not considered to be the provision of care. You will also make a GST-free supply under section 38-30(1) for the following charges to consumers: ● Administration Fee (xx% of Home Care Package annual amount) – GST-free as part of the supply of care. ● Case Management Fee (Advisory and care co-ordination fee for managing a consumer’s HCP account for the month - $xx) – GST-free as part of the supply of care. ● Establishment Fee (for the assessment of care needs or individual care planning or case management - $xx) – GST-free as part of the supply of care. ● Service Cancellation Fee, for example where a consumer gives insufficient notice that a service is not required – full service fee – GST-free if the intended supply is GST-free. ● Surcharges (for evenings, public holidays, Saturdays, Sundays - various) – GST-free as part of the supply of care. You will not make a GST-free supply for any Exit Fee charged to consumers permanently leaving your service because the Exit Fee is not for a supply of care and therefore section 38-30(1) does not apply. Exit fees are payment for the activities associated with leaving the approved provider and/or for transferring unspent funds to another provider, they are not payment for care or part of the service of arranging for care. Accordingly, the payment is for a taxable supply and GST will apply. Administration Fees (other than exit fees) and Care Planning Fees will be payment for a GST-free supply that you make if: ● the payment is for arranging for care services to be delivered and form part of home care, and ● you receive a home care subsidy under the Aged Care Act 1997 or the Aged Care (Transitional Provisions) Act 1997 for supplying the care. | Detailed Reasoning - Home and Community Care: Subsection 38-30(2) provides: 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. Sections 6 and 7 of the Home and Community Care Act 1985 (HACC) identify the target population for the program and the type of services within the scope of the program: 6. The program shall be directed towards assisting— (a) persons living in the community who, in the absence of basic maintenance and support services provided or to be provided within the scope of the program, are at risk of premature or inappropriate long term residential care, including— (i) frail or at-risk aged persons, being elderly persons with moderate or severe disabilities; (ii) younger disabled persons, being persons with moderate or severe disabilities; and (iii) such other classes of persons as are agreed upon by the Commonwealth Minister and the State Minister; and (b) the carers of those persons. 7. (1) Subject to sub-clauses (3) and (4), a service is within the scope of the program if it provides or will provide basic maintenance and support to persons within the target population, being a service that provides or will provide one or more of the following— (a) home help or personal care (or both); (b) home maintenance or modification (or both); (c) food; (d) community respite care; (e) transport; (f) a community paramedical service; (g) community nursing; (h) assessment or referral (or both); (i) education or training for service providers and users (or both); (j) information; (k) co-ordination; or (l) such other service as is agreed upon by the Commonwealth Minister and the State Minister. Your funding agreement with the Western Australian Department of Health requires you to provide agreed amounts of specified services to persons in the target population. Your services are limited to those specified services for which you receive the government funding. You will make a GST-free supply of care under section 38-30(2) when you supply care services for which you receive HACC program funding. However, if you supply services in excess of that for which the HACC funding relates (for example, you receive government funding for a total of 500 hours of respite care for carers, but the services exceed the total of 500 hours), the supply of those excess services will not be GST-free home care unless other government funding relates to the services. | Detailed Reasoning - Meals for clients of other councils: Where you supply meals to a client of another council, there are generally two supplies that are being made: ● a supply by you to the other council; and ● a supply by that other council to their client. The payment by the other council’s client to you as well as the payment by the council to you is the consideration for your supply to the other council. That payment by the client is also consideration for the supply by that other council to the client. This is explained in example 7 in Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies : Example 7: community care 171. A, a community care provider, receives Health and Community Care funding to provide home and maintenance services to people living at home, who are frail and have a moderate or severe disability. A sets the fees for its services according to the care recipient's ability to pay. 172. C, a client of A, is the care recipient. C is assessed by A as being entitled to receive a lawn-mowing service every fortnight at the subsidised rate of $10. There is a contractual relationship between A and C for the supply of the lawn-mowing service at the subsidised rate of $10. 173. A engages B, an independent contractor, to provide the lawn mowing service to C. A agrees to pay B $44 for its service. B is not the recipient of funding under the Home and Community Care Act 1985. 174. C is required to pay A $10 for the service, but A directs C to pay the amount to B on A's behalf. A then pays B the balance of $34. 175. There is no contractual relationship between B and C. 176. B is making a supply of the lawn-mowing service for $44 to A but providing that service to C. A is also making a supply of a lawn mowing service. A's supply is to C at the subsidised rate of $10. Where you make a supply to another council, the supply will not be GST-free under section 38-30, as care cannot be supplied to an entity carrying on a business, as explained in Question 4 below. Further, meals or food are not listed under item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles – as required by subsection 38-30(3). Your service of delivering meals to a client of the other council may be GST-free as a service supplied to an Australian government agency pursuant to subsection 38-60(3), as outlined in Question 5 below. | Detailed Reasoning - Commonwealth Home Support Programme (CHSP): You will be moving from HACC to CHSP from 1 July 2018. The administrative arrangements for CHSP will be broadly the same as for HACC. Section 38-30(4) provides: 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 first requirement under subsection 38-30(4) is that the supplier receives government funding in relation to the respective supply, in this case the supply of Commonwealth Home Support Programme (CHSP) services. The second requirement under subsection 38-30(4) is that the supply of care is of a kind determined in writing by the Aged Care Minister. The Aged Care Minister has made the GST-free Supply (Care) Determination 2017 (Care Determination). The Care Determination has two schedules: ● Schedule 1 in relation to a targeted person; and ● Schedule 2 in relation to a carer that substantially enables the carer to give care to a targeted person. The terms ‘care’, ‘carer’ and ‘targeted person’ are defined in the Care Determination: care means services to enable a targeted person to continue to live at home. carer means a person who provides care to a targeted person. targeted person means a frail, older person or a younger person who: (a) has a moderate, severe or profound disability (including addiction to a drug); and (b) lives at home; and (c) would, in the absence of services of the kind mentioned in Schedule 1, be at risk of prematurely or inappropriately needing: (i) long term care in a hospital or other institution; or (ii) residential care within the meaning of the Aged Care Act 1997 . | Detailed Reasoning - Care provided to targeted persons: Schedule 1 to the Care Determination lists 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 You will make a GST-free supply of care under section 38-30(4) when you supply care services to targeted persons, where they are of a kind listed in Schedule 1 to the Care Determination and you receive funding for the supply under a CHSP Agreement. Companionship visits will not be GST-free as they are not listed in the Care Determination. You will also make a GST-free supply under section 38-30(4) where you charge a Cancellation Fee, for example where a consumer gives insufficient notice that a service is not required, if the intended supply is GST-free. If you supply services in excess of that for which the government funding relates (for example, you receive government funding for a total of 500 hours of respite care for carers, but the services exceed the total of 500 hours), the supply of those excess services will not be GST-free home care unless other government funding relates to the services or the services are GST-free under subsection 38-30(3) as discussed in relation to question 3. | Detailed Reasoning - Care provided to carers: Schedule 2 to the Care Determination lists the following items of care provided to carers (a person who provides care to a targeted person): | 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 Training in the use of services mentioned in Schedule 1 10 Provision of basic equipment for social support 11 Linen services 12 Counselling 13 Carer support 14 Community advocacy for a purpose mentioned in section 81-1 of the Aged Care Act 1997 15 Provision and monitoring of personal alert systems 16 Assessment of the person’s care needs 17 Referral to other community care services You will make a GST-free supply of care under section 38-30(4) when you supply care services to carers, where they are of a kind listed in Schedule 2 in the Care Determination and you receive funding for the supply under a CHSP Agreement. If you supply services in excess of that for which the government funding relates (for example, you receive government funding for a total of 500 hours of respite care for carers, but the services exceed the total of 500 hours), the supply of those excess services will not be GST-free home care unless other government funding relates to the services. | Detailed Reasoning - Non-government subsidised/funded services: 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 GST and home care guidance on the ATO website (search for ‘QC 55890’ on the ATO website) lists the following services that are not covered by Item 2.1: ● 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, they 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. Where you supply home care services of a kind covered by Item 2.1 daily living activities assistance directly 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. Where you supply 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 - Subcontracted service – entities other than Australian government agencies, insurers and compulsory third party scheme operators: Section 38-30 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. (2) 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. (3) 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. (4) 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 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). To satisfy these provisions, there must be a supply of ‘care’ or ‘home care’. In the scenario being considered, you supply the service to Entity A of providing the stipulated services to the client of Entity A. ‘Home care’ is defined by reference to the GST Act and the Aged Care Act 1997 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’ 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. For the purposes of ‘care’ in subsections in subsections 38-30(2) and (4), it is considered that the definition in the Aged Care Act 1997 would be reflective of the meaning of care generally. As such, it is considered that a supply of ‘care’ or ‘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 unless section 38-60 of the GST Act applies. If section 38-60 does not apply and 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 GSTR 2006/9 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, in your circumstances, as Entity A is a home care provider that is not an Australian government agency, insurer or compulsory third party scheme operator, the supply will not be GST-free under section 38-60. Note: Section 38-60 in relation to services supplied to Australian government agencies, insurers and compulsory third party scheme operators is discussed in question 5. | Detailed Reasoning - Australian government agencies: 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). As explained in Question 2, the Aged Care Minister has made the GST-free Supply (Care) Determination 2017 (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 Schedule 1 to a targeted person is similar to a supply that is GST-free because of subsection 38-30(2). It is administratively accepted that local governments (councils) are an Australian government agency and the payment from the other council to you is funding for the purposes of this provision. However your supply to the other council is not ‘care’ as care can only be supplied to an individual. A business entity cannot be supplied with care. Therefore your supplies to another Australian government agency do not satisfy the requirements of subsection 38-30(4). However, subsections 38-60(3) and (4) state: | 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. Where another Australian government agency contracts you to provide goods and/or services to one of their clients, you are making the supply to that other Australian government agency of the service of making a supply of goods and/or services to an individual. The same reasoning as stated previously in respect of subsection 38-30(3) and (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 you are being contracted by an Australian government agency and its payment to you would constitute funding by the Commonwealth, State or Territory. Where another Australian government agency contracts you to provide goods and/or services to one of their clients, the supply to the Australian government agency is GST-free under subsection 38-60(3) to the extent the services are of a kind covered by: ● Item 2.1 daily living activities assistance and provided by you to an aged or disabled person, or ● the GST-free Supply (Care) Determination 2017 and provided by you to a targeted person unless you have agreed with the Australian government agency that the supply is not to be treated as a GST-free supply under subsection 38-60(4). | Detailed Reasoning - Insurers and compulsory third party scheme operators: As explained in question 1 (Meals for clients of other councils) and question 3, your supply to another entity carrying on the business is not ‘care’ as care can only be supplied to an individual. A business entity cannot be supplied with care. However, subsections 38-60(1), (2) and (4) state: | Detailed Reasoning - Insurers: (1) If: (a) a supply is a supply of a service to an insurer; 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) for settling one or more claims under an * insurance policy of which the insurer is an insurer; 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 - 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 - 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. Where an insurer or compulsory third party scheme operator contracts you to provide goods and/or services to one of their clients, you are making the supply to that insurer or compulsory third party scheme operator of the service of making a supply of goods and/or services to an individual. The same reasoning as stated previously in respect of subsection 38-30(3) and (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. Where the insurer or compulsory third party scheme operator is not an Australian government agency, payments by them to you will not be government funding. However, subsection 38-30(3) is relevant as this does not require government funding. The supply under your arrangement with the insurer or compulsory third party scheme operator is GST-free under subsection 38-60(1) or (2) respectively of the GST Act to the extent the services are of a kind covered by: ● Item 2.1 daily living activities assistance and provided by you to an aged or disabled person unless you have agreed with the insurer or compulsory third party scheme operator that the supply is not to be treated as a GST-free supply under subsection 38-60(4).

Reasons for decision: In this reasoning, please note: | ● 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 | ● all reference materials referred to are available on the Australian Taxation Office (ATO) website ato.gov.au