Issue
Is the entity, a supplier of disability services, making a GST-free supply under section 38-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it coordinates a therapy program for disabled children?
Decision
No, the entity is not making a GST-free supply under section 38-40 of the GST Act when it coordinates a therapy program for disabled children. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of disability services. The entity carries out various activities in coordinating therapy programs for disabled children.
The parents of the disabled children receive funding under a State or Territory law that is complementary to the Disability Services Act 1986 . The parents of the disabled children use these funds to pay the entity for its services.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
A supply of specialist disability services is GST-free under section 38-40 of the GST Act where the supplier receives funding under the Disability Services Act 1986 or under a complementary State law or Territory law in respect of the services.
In this case, the parents of the disabled children receive funding under a State or Territory law that is complementary to the Disability Services Act 1986. The entity, as the supplier of the disability services, then receives the payment for its services from the disabled children's parents. Therefore, the entity, the supplier of the services, is not receiving funding under the Disability Services Act 1986 or under a complementary State law or Territory law, rather the funding is received by the disabled children's parents. As such, the supply of services to disabled children is not GST-free under of section 38-40 of the GST Act.
The entity is registered for GST and the supply satisfies the other positive limbs of 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. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act, when it coordinates a therapy program for disabled children.