1 Does GST apply to the specified fees collected by Entity B from Services Australia which Entity B then forwards to Entity A under a tripartite agreement and is a tax invoice required to be issued by Entity A in relation to the specified fees?
1 No, GST does not apply to the specified fees collected by Entity B from Services Australia which Entity B then pays to Entity A under the tripartite agreement and no tax invoice is required to be issued by Entity A to Entity B in relation to the specified fees. Question 2 Is the supply of specified services to individual care recipients GST-free under Subdivision 38-B of the GST Act? Answer 2 Yes, the supply of specified services to individual care recipients is GST-free under Subdivision 38-B of the GST Act. Question 3 Is a tax invoice required to be issued by Entity A in relation to supplies made under the agreements? Answer 3 No, a tax invoice is not required to be issued by Entity A in relation to supplies made under the agreements to the extent the supplies made by Entity A are GST-free home care services under subsection 38-30(1) of the GST Act.
Entity A/you is registered for goods and services tax. You are a franchisor under a franchise agreement with the franchisee, Entity B. The franchise agreement forms part of the scheme of this private ruling. You are an approved home care package (HCP) provider under the Aged Care Act 1997 . Entity A enters into a tripartite agreement with Entity B and individual home care package care recipients. Entity A and Entity B have also entered into a second agreement relating to the supply of the home care services.
A New Tax System (Goods and Services Tax) Act 1999 - section 9-5 A New Tax System (Goods and Services Tax) Act 1999 - subdivision 38-B A New Tax System (Goods and Services Tax) Act 1999 - section 38-30
Under section 9-5 of the GST Act, you make a taxable supply if: (a) You make a supply for consideration; and (b) The supply is made in the course or furtherance of an enterprise that you carry on; and (c) The supply is connected with the indirect tax zone; and (d) You are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. As you are registered for GST and make supplies in the course of an enterprise you carry on in Australia and the supplies are not input taxed, the issue in this case is to what extent your supplies of package management services are GST-free. Under section 38-30 of the GST Act, the supply of certain home care services are GST-free. Subsection 38-30 of the GST Act states: (1) A supply of home care is GST-free if: (a) home care subsidy is payable under Part 3.2 of the Aged Care Act 1997 or Part 3.2 of the Aged Care (Transitional Provisions) Act 1997 to the supplier for the care; or (b) the Commonwealth contribution amount worked out in respect of the supplier, using section 48-1A of the Aged Care Act 1997
, for the recipient of the care in respect of the payment period (within the meaning of that Act) in which the supply is made, is greater than zero; or (c) both of the following apply: (i) the supplier is eligible for home care subsidy under section 46-1 of the Aged Care (Transitional Provisions) Act 1997 in the payment period (within the meaning of that Act) in which the supply is made; (ii) the supply is a supply of a kind specified in the regulations. (2) 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. (3) A supply of home 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. (4) A supply of care is GST-free if: (a) the supplier receives funding from the Commonwealth, a State or a Territory in connection with the supply; and (b) 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).
In your case, you have entered into agreements that specify that you are an approved provider of government funded home care packages and will provide specified services for home care package recipients, for which you will receive specified fees. Accordingly, paragraph 38-30(1)(a) is relevant to the services being provided. Under paragraph 38-30(1)(a), a supply of home care services is GST-free if home care subsidy is payable to the supplier for the care. What needs to be determined is whether, under the arrangement: • you are supplying home care services to home care package recipients; and • home care subsidy is payable to you for the supply of that care. If you are supplying home care services to home care recipients, but you do not receive home care subsidy for the supply of the care, subsection 38-30(3) of the GST Act may be relevant.
Alternatively, analysis of the arrangement may show that you are not directly engaging the home care recipients but rather that you are contracted to another entity to provide home care services to home care recipients who are clients of the contracting entity. If this is the case, your supply of services are not GST-free under section 38-30 of the GST Act. Goods and Services Taxation Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) outlines the meaning of the term 'supply' in the GST Act and sets out a number of propositions which apply to analysing complex multi-party arrangements, commonly known as tripartite arrangements. In two party transactions, a thing supplied to an entity is typically also provided to that entity. However, in more complex arrangements involving more than two parties, paragraph 115 of GSTR 2006/9 states that analysis may reveal: • a supply made to one entity but provided to another entity; • two or more supplies made; or • a supply made and provided to one entity and consideration paid by a third party.
Paragraph 116 of GST 2006/9 provides that, as with two party transactions, the GST consequences of tripartite arrangements turn on identifying: • one or more supplies; • consideration (a payment, act or forbearance); • a nexus between the supply and the consideration; and • to whom the supply is made. Paragraph 119 of GSTR 2006/19 states that examining the agreement or other reciprocal legal relationships is the starting point in analysing an arrangement to determine who is making a supply to whom. Paragraph 6 of GSTR 2006/9 explains that the term 'agreement' as used in the Ruling can refer to written agreements, oral agreements, legal instruments or combinations of such things. In this case, there are three agreements governing the arrangement being the franchise agreement and the two other agreements.
The agreements show that Entity A is supplying home care services to care recipients for which they receive home care subsidy. Therefore, the supply of these services are GST-free under subsection 38-30(1) of the GST Act. Entity A is not making a taxable supply to Entity B under section 9-5 of the GST Act and is not required to issue a tax invoice to Entity B relating to the home care services. The agreements show that Entity B is merely collecting the agreed amount of home care subsidy for the specified services from Services Australia to forward to Entity A. The specified fees are not consideration for any supply made between Entity A and Entity B. To the extent that the specified services supplied by Entity A to care recipients are GST-free under subsection 38-30(1) of the GST Act, Entity A is not required to issue tax invoices for supplies it makes under the two other agreements.