Will the supply of the dwelling to the specialist disability accommodation provider under a head lease, be considered a GST-free supply under Section 38-38 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
No. Your supply of the dwelling does not meet the requirements to be considered GST-free under section 38-38 of the GST Act. The supply of the dwelling is an input taxed supply of residential premises under subsection 40-35(1) the GST Act.
You have a Tax File Number and are not registered for goods and services tax (GST). You do not currently have an Australian Business Number. The Trust was established for acquiring land to develop a dwelling suitable for use as disability accommodation for people with disability who require specialist housing solutions under the National Disability Insurance Scheme (NDIS). Construction of the property was planned and designed to meet the requirements under the NDIS for specialist disability accommodation (SDA). There were numerous adjustments and modifications required to ensure the dwelling complies with the NDIS. These include larger doorways and hallways, bench tops which were adjustable in height, disabled toilets and shower facilities and ramps at specified angles. The application for NDIS specialist disability accommodation (high physical support) was submitted and the certificate was granted. A head lease was executed between the Trust and an SDA provider. The SDA provider will sub-lease the various tenant rooms to an NDIS participant who has specialist accommodation support approved under their NDIS plan. The Trust is not a registered NDIS provider. Assumption
We assume you will register for GST if you receive a favourable ruling.
A New Tax System (Goods and Services Tax) Act 1999 section 38-38 A New Tax System (Goods and Services Tax) Act 1999 section 40-35
The supply of SDA is GST-free where all the requirements of section 38-38 of the GST Act are satisfied. Legislation Section 38-38 of the GST Act provides that certain supports provided to NDIS Participants are GST-free. Relevantly, section 38-38 of the GST Act states: A supply is GST-free if the supply: (a) is a supply to a participant (within the meaning of the National Disability Insurance Scheme Act 2013 ) for whom a participant's plan is in effect under section 37 of that Act; and (b) is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant 's plan; and (c) is made under a written agreement, between the supplier and the participant or another person, that: (i) identifies the participant; and (ii) states that the supply is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant ' s plan; and (d) is of a kind that the *Disability Services Minister has determined in writing. NDIS plan is in effect The participant's NDIS plan must be in effect under section 37 of the
National Disability Insurance Scheme Act 2013 (NDIS Act), which means it must be approved by the National Disability Insurance Agency (NDIA). The plan ceases to be effective when it is replaced by another plan, or when the NDIS Participant ceases to be a participant in the NDIS. Reasonable and necessary supports The supply must be of one or more reasonable and necessary supports, as defined in the participant's NDIS plan. Where the participant's NDIS plan specifies an amount (such as time or quantity) of reasonable and necessary supports, any supplies of supports in excess of these specifications will not be a GST-free NDIS supply. Made under a written agreement There must be made a written agreement between you, the supplier, and the NDIS participant (or another person). The written agreement must: identify the NDIS participant, and state that the supply is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of the NDIS Act, in the participant's NDIS plan. A supply covered by the Disability Services Minister's Determination
For the supply to be GST-free, as well as meeting the other three requirements outlined above, your supply to the NDIS Participant must be of a kind covered by the A New Tax System (Goods and Services Tax) (GST free Supply-National Disability Insurance Scheme Supports) Determination 2021 (NDIS Determination). Section 6 of the NDIS Determination lists the kind of supplies covered by the NDIS Determination. Item 1 of subsection 6(1) lists: " Specialist disability accommodation (within the meaning of the National Disability Insurance Scheme rules) and accommodation/tenancy assistance" as a supply for the purposes of paragraph 38-38(d) of the GST Act. The National Disability Insurance Scheme (Specialist Disability Accommodation) Rules 2020 (NDIS rules) sets out the requirements that must be met to supply SDA. Section 24 of the NDIS rules state: 24 Requirements relating to the funding of specialist disability accommodation (1) For specialist disability accommodation support specified in an eligible participant's plan to be funded under the National Disability Insurance Scheme, the following requirements must be satisfied:
(a) the specialist disability accommodation must be provided by an SDA provider; (b)... Section 5 Definitions in the NDIS rules define an SDA provider as follows: SDA provider means: (a) a registered NDIS provider that is registered to provide specialist disability accommodation; or (b) a registered provider of supports that can provide specialist disability accommodation under its registration. specialist disability accommodation : (a) means accommodation for a person who requires specialist housing solutions, including to assist with the delivery of supports that cater for the person's extreme functional impairment or very high support needs; but (b) does not include supports delivered to the person while the person is living in the accommodation.
The NDIS rules specify that the SDA must be provided by an SDA provider. As you are not an SDA provider within the meaning of the NDIS rules, you cannot make a supply of SDA that meets the requirements of section 38-38 of the GST Act. Section 38-38 of the GST Act also requires that for a supply to be GST-free the supply be made to a participant. The supply by you under the head-lease is not a supply to a NDIS participant - it is a supply to an SDA provider. You do not satisfy the requirements under section 38-38 of the GST Act. Paragraph 40-35(1)(a) of the GST Act provides that a supply of premises that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed if the supply is of residential premises. Your supply of the dwelling to an SDA provider is an input taxed supply of residential premises. You will not be entitled to claim input tax credits for the GST included in costs to the extent that they relate to making supplies that would be input taxed supplies of residential premises, such as construction costs.