Private ruling: supply of care services
Published: October 2011

Ruling: Q1: Is the supply of care services by you to a disabled person in their own home a GST-free supply? | A1: Yes, where you are making a supply of community 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 your supply will be GST-free.

Relevant facts and circumstances: You are a private agency that supplies qualified nurses and carers to private persons and hospitals. You are registered for GST. One of your client's is a disabled person who needs 24 hour care staff. The client's affairs are administered by a State Trustee and Guardian. The Trustee makes all payments and financial arrangements on behalf of your client. You provide direct personal care to your client in the client's own home. These services consist of daily living activities including but not limited to personal assistance, including individual attention, supervision and physical assistance with bathing and personal hygiene, assisting with continence management, eating, dressing and are of the kind covered by Item 2.1 (daily living activities assistance) of part 2 of schedule 1 to the Quality of Care Principles 1997. Currently you invoice the client for your services based on an hourly 'charge rate' and send the invoice to the Trustee for payment. Your 'charge rate' is made up of the nurses/carers hourly rate of pay, costs such as superannuation, an administration component and your margin. You add GST of 10% to the total amount of the hourly charge rate for any given period. You do not receive any funding under the Aged Care Act 1997 , or the Home and Community Care Act 1985 (HACC), or the Disability Services Act 1986 or any other form of Government funding in relation to the supply of these services. The Trustee has questioned your application of GST to the cost of your services.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 , section 9-5, 38-25, 38-30,195-1.

Reasons for decision: Summary: GST is payable on taxable supplies. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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 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. The GST Act specifically identifies and categorises certain supplies as GST-free. GST is not payable in relation to GST-free supplies. You have advised that you supply personal care services to a disabled person. These services are provided to the disabled person (your client) in their own home under a private arrangement with your client. You do not receive any government funding under the Aged Care Act 1997 , the Home and Community Care Act 1985 the Disability Services Act 1986 or under a complementary State law or Territory law in respect of the services to assist you to provide your services in this instance. You invoice your client care of the State Trustee and Guardian who make payment on your client's behalf. Division 38 of the GST Act relates to GST-free supplies. It has been suggested to you by the client's trustee that section 38-25 of that division is applicable to your supplies of care services to the disabled person under their guardianship as it provides that certain supplies of 'residential care' are GST-free in a residential setting. 'Residential care' is not a defined term under the GST Act but takes its meaning from section 41.3 of the Aged Care Act 1997 as: | Detailed Reasoning - Meaning of residential care: (1) Residential care is personal care or nursing care, or both personal care and nursing care, that: (a) is provided to a person in a residential facility in which the person is also provided with accommodation that includes: (i) appropriate staffing to meet the nursing and personal care needs of the person; and… (2) However, residential care does not include any of the following: a) care provided to a person in the person's private home; (b) … As you are making the supply of your services to the disabled person in their private home it is not a supply of residential care and none of the provisions of section 38-25 will apply to that supply. However, the operation of section 38-30 of the GST Act which is about supplies of 'Community care' would appear of relevance to your circumstances. As you do not receive any funding or subsidy from the Government in relation to your supplies, it is relevant to consider whether your supplies fall within the scope of subsection 38-30(3) of the GST Act. Subsection 38-30(3) provides that a supply of community 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. Section 195-1 of the GST Act defines community care as having the meaning given by section 45-3 of the Aged Care Act 1997 . Subsection 45-3(1) of the Aged Care Act 1997 provides that community 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 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles (item 2.1 of the QCP) cover services which involve personal assistance, including individual attention, individual supervision, and physical assistance with: (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 | Detailed Reasoning - Excludes hairdressing: You have confirmed that the services you provide to your disabled client are those that are outlined above. Your services are supplied to your client in their own home and as such that setting does not meet the definition of residential care. By their nature these services constitute care consisting of a package of personal care services and other assistance. It follows that the services you provide come within the meaning of community care pursuant to subsection 43-3(1) of the Aged Care Act 1997 . As a consequence, your supply of those services to your disabled client meets the requirements of subsection 38-30(3) of the GST Act and are GST-free. It is only these specific services, where provided to an aged or disabled person, that are GST-free under this subsection. In summary, your supplies of the specified care services to your disabled client are GST-free. You are not liable for GST in relation to the 'hourly charge rate' invoiced to your disabled client. The component of your administrative costs that relates to these community care services, is part of the business cost that you incur in making this GST-free supply. Where goods or any other services are provided, they will not be GST-free under this subsection, for example shampoo, hairdressing or cleaning. Such supplies would constitute a taxable supply. | Detailed Reasoning - Further information:: Should you provide a package of care services to other clients which include services not covered under item 2.1 of Part 2 of Schedule 1 to the QCP you may wish to consider the supply of services under: · subsection 38-30(1) of the GST Act which 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 which 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(4) of the GST Act which provides that a supply of care is GST-free if: o the supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply; and o 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 table in subsection 38-10(1) of the GST Act which includes at Item 10 'Nursing' as a service that is a GST-free supply under subsection 38-10(1) providing that the supplier is a recognised professional in relation to the supply of services of that kind. And, 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. · section 38-40 of the GST Act which provides that a supply of services is GST-free if the supplier receives funding under the Disability Services Act 1986 or under a complementary State law or Territory law in respect of the services. | Detailed Reasoning - Correcting GST mistakes: The Tax Office publication Correcting GST mistakes explains that where you made a GST mistake on an earlier activity statement (AS) you may, subject to certain correction limits, be able to make a correction on a later AS instead of revising a previous AS. The paragraph titled 'Corrections that decrease your GST to be paid' may be of particular relevance. I have enclosed a copy of the fact sheet for your assistance. MT 2010/1 Miscellaneous tax: restrictions on GST refunds under section 105-65 of Schedule 1 to the Taxation Administration Act 1953 explains that subsection 39(3) of the Taxation Administration Act 1953 (TAA) provides that where GST is incorrectly included in the price of a non-taxable supply it can be refunded under certain conditions to the supplier. Paragraph 121 provides: 121. The Explanatory Memorandum to the A New Tax System (Goods and Services Tax Administration) Bill 1998 (which introduced section 39 of the TAA, the predecessor to section 105-65) states: 3.40 However, if GST is overpaid in a situation where supplies were incorrectly treated as taxable supplies in a GST return or assessment, a refund will have to be paid only if the Commissioner is satisfied that the recipients of the supplies on which the GST was overpaid have been reimbursed. The recipients of the supplies must not be registered or required to be registered for GST purposes. [New subsection 39(3)] 3.41 Because GST is payable by suppliers but is ultimately borne by the consumers of goods and services, a refund of overpaid GST would ordinarily result in a windfall gain to the supplier. A supplier will need to satisfy the Commissioner that an amount corresponding to the refund will be passed on to the persons who ultimately bore the cost of the overpaid GST. All of the publications referred to above can be accessed from the Tax Office website at www.ato.gov.au

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.