GST and meals supplied to residents of independent living units

Is the entity, a loan/licence retirement village, making a GST-free supply under section 38-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies meals to residents in independent living units?

No, the entity is not making a GST-free supply under section 38-25 of the GST Act when it supplies meals to residents in independent living units. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is the operator of a loan/licence retirement village. It is not an endorsed charitable institution or an endorsed trustee of a charitable fund. It supplies residents with a licence for life, to occupy one of the independent living units. The entity also supplies meals in a dining area within the retirement village. No other services or goods are supplied to residents by the entity.

The entity is privately owned. It does not receive any Commonwealth, State or Territory government funding.

The entity is not an approved provider of residential care services within the meaning of the Aged Care Act 1997 .

The entity is registered for GST. The supply of the meals satisfies the other positive limbs of section 9-5 of the GST Act.

Section 38-25 of the GST Act provides that a supply of certain residential care services, which includes the supply of meals, to the person receiving the care, is GST-free if it is provided by a residential care facility that qualifies for funding under the Aged Care Act 1997, or provided by a facility that receives Commonwealth, State or Territory funding, and the residential care services are provided in accordance with a determination by the Minister responsible for Aged Care. However, as the entity is not an approved provider of residential care under the Aged Care Act 1997 and does not receive Commonwealth, State or Territory funding, subsections 38-25(1) and 38-25(2) of the GST Act do not apply.

For subsection 38-25(3) of the GST Act to apply, the supply of residential care services through private residential care facilities must satisfy the following criteria: • The care recipient is aged or disabled and receiving the care services in a residential setting. • The services are provided to the care recipient in accordance with a determination by the Minister responsible for Aged Care. • The services include, and are only provided to people who require the services set out in either item 2.1 or item 3.8 of Schedule 1 to the Quality of Care Principles.

The term 'residential setting' is not defined in the GST Act. However, Acts in pari materia can be consulted in interpreting the Act in question. An Act in pari materia is an Act which deals with the same subject matter as the Act being interpreted ( Danziger v. The Hydro-Electric Commission [1961] Tas SR 20).

Section 38-25 of the GST Act refers to principles made under the Aged Care Act 1997. Therefore, it is permissible to consult the Aged Care Act 1997, as an Act in pari materia , to determine the meaning of the term 'residential setting'. In the context of residential care, 'residential setting' has a similar meaning to 'residential facility' in the Aged Care Act 1997.

A 'residential facility' in the Aged Care Act 1997 is a facility that provides accommodation that includes: • appropriate staffing to meet the nursing and personal care needs of the person • meals and cleaning services • furnishing, furniture and equipment for the provision of that care and accommodation.

The Aged Care Act 1997 at paragraph 41-3(2)(a) provides that residential care does not include care provided to a person in their private home. It follows that the terms 'residential facility', and therefore 'residential setting', do not include a private residence.

This means that where a person lives in an independent living unit that can be regarded as their own home, it will not come within the ambit of these terms. This applies whether the unit is owned or leased, and whether or not the unit is in a specific complex or in the community at large.

In this context, 'residential setting' equates with the type of facility provided in the publicly funded residential care sector, for example nursing homes.

Services provided to a resident of a retirement village, however, may be taken to be provided in a 'residential setting' under subsection 38-25(3A) of the GST Act where the following conditions are satisfied. • The person is a resident of a 'serviced apartment' in a retirement village. • There is a written agreement under which the entity provides daily meals and heavy laundry services to all the residents of the serviced apartment.

The term 'serviced apartment' is defined in section 195-1 of the GST Act and further explained in the fact sheet GST and serviced apartments in retirement villages (NAT 12761). The fact sheet specifically provides that a serviced apartment does not include an independent living unit.

The term 'serviced apartment' is defined in section 195-1 of the GST Act and further explained in the fact sheet GST and serviced apartments (NAT 12761). The fact sheet specifically provides that a serviced apartment does not include an independent living unit.

As an independent living unit is not a serviced apartment, the meals are not taken to be provided by the entity in a 'residential setting' under subsection 38-25(3A) of the GST Act.

The meals supplied by the entity therefore are not GST-free under subsection 38-25(3) of the GST Act as the entity does not supply meals to residents in a 'residential setting' in conjunction with other 'care services'. The supply of meals by the entity to a resident of an independent living unit in the retirement village is a taxable supply under section 9-5 of the GST Act. This is because the supply satisfies the requirements of a taxable supply, including that the entity is registered for GST, and the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Note 1: As the entity provides meals to residents of independent living units in a dining area, the supply of meals is not GST-free as a supply of 'food' by virtue of paragraph 38-3(1)(a) of the GST Act. Note 2: As the entity is not an endorsed charitable institution or an endorsed trustee of a charitable fund the supply of the meals to a resident of an individual living unit in the retirement village is not GST-free under section 38-260 of the GST Act.