Issue
Is the entity, a site administrator of a retirement village, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides various services to its employer, the retirement village operator?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides various services to its employer, the retirement village operator. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.
Facts
The entity is a site administrator of the retirement village. The entity provides various services, as an employee, to the retirement village operator (the operator).
The entity is an employee of the operator (ie the operator pays the entity's salary, is responsible for superannuation contributions and withholds Pay As You Go (PAYG) amounts from the entity's salary). The entity is not providing the services as an interposed entity or as agent of the operator.
The residents pay a monthly management fee directly to the operator. The operator uses a portion of these fees to pay the salary of the entity.
Reasons for Decision
One of the requirements for a supply to be taxable under section 9-5 of the GST Act, is that the supply must be made in the course or furtherance of an enterprise carried on by the supplier (paragraph 9-5(b) of the GST Act).
Section 9-20 of the GST Act deals with the meaning of the term 'enterprise'. Subsection 9-20(2) of the GST Act provides that an enterprise does not include an activity, or series of activities, done by an employee.
The entity is an employee of the retirement village operator. Therefore, any supply that the entity makes to the retirement village operator as an employee is not considered to be a supply in the course or furtherance of an enterprise carried on by the entity.
Accordingly, paragraph 9-5(b) of the GST Act is not satisfied and the entity is not making a taxable supply under section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.