Does GST apply to NDIS providers?
The National Disability Insurance Scheme (NDIS) has transformed how disability services are delivered in Australia. While the NDIS provides crucial funding and support, navigating the complexities of taxation—particularly Goods and Services Tax (GST)—can be challenging for providers and participants alike. This article will explore whether GST applies to NDIS services, how it impacts providers, and what you need to know to ensure compliance.
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Understanding GST in Australia
Before discussing the specifics of the NDIS, it's essential to understand GST. Introduced in Australia in 2000, GST is a value-added tax levied on most goods and services sold or consumed within the country. The current GST rate is 10%.
Businesses must generally register for GST if their annual turnover exceeds $75,000. Once registered, they must charge GST on their taxable sales, report their earnings, and submit Business Activity Statements (BAS) to the Australian Taxation Office (ATO).
GST and NDIS Services
GST registration for NDIS providers
Most NDIS providers must register for GST, significantly if their turnover exceeds the threshold of $75,000. This requirement applies to registered and non-registered providers delivering services funded by the NDIS.
Exceptions to GST registration
Some providers may not need to register for GST if their annual turnover exceeds the threshold. However, even if a provider is not registered, they may still receive payments for GST-inclusive services if they work with NDIS participants.
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Taxable and exempt supplies
Not all NDIS services are subject to GST. Providers must understand the distinction between taxable and exempt supplies.
Taxable supplies
Taxable supplies are those for which GST must be charged. Most services provided under the NDIS framework are considered taxable supplies, including:
- Support services (e.g., personal care, therapy, and assistance)
- Equipment and aids used in providing services
- Accommodation services in specific contexts
Providers must charge 10% GST on these taxable supplies and include it in their invoices.
Exempt supplies
Certain services may be exempt from GST. For example:
- Services provided under the NDIS that are considered "support coordination" or "capacity building" may not attract GST if they meet specific criteria outlined by the ATO.
- Depending on the service's context and nature, services that fall under the "health services" exemption may also not incur GST.
Providers must review the ATO guidelines and assess their services to determine whether they fall under the exempt category.
GST implications for NDIS participants
NDIS participants may also wonder about the impact of GST on their plans. Generally, participants can claim the cost of GST-inclusive services as part of their NDIS funding.
Claiming GST in NDIS funding
When participants utilise services from registered NDIS providers, they are charged GST as part of their service fees. The NDIS pricing arrangements include GST in the funding amount, allowing participants to access the services without additional out-of-pocket costs.
However, if a participant engages a non-registered provider, they may be unable to claim GST on those services. Participants must work with registered providers to ensure compliance with the NDIS framework and access the full funding amounts available.
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Compliance and reporting obligations
1. Business Activity Statements (BAS)
As an NDIS provider registered for GST, you must submit a regular BAS to the ATO. The BAS outlines your sales and purchases for a specific period and allows the ATO to calculate your GST liabilities.
- Filing BAS: You can file your BAS monthly or quarterly, depending on your business structure and preferences. Ensure your BAS accurately reflects the GST collected from your taxable supplies and the GST paid on your business expenses.
- Accounting for GST: When preparing your BAS, consider the following:
- Income reporting – Include all taxable sales (services provided, equipment sold)
- Input tax credits – Claim any GST paid on eligible business purchases.
- GST on exempt supplies – If you provide exempt supplies, ensure they are reported correctly
Staying organised and maintaining thorough records of your financial transactions is crucial for accurate reporting and compliance. Thriday is the perfect tool for NDIS providers or carers who are looking for a simple and cost effective way to stay compliant.
2. Invoicing and GST requirements
When issuing invoices to NDIS participants or other businesses, ensure they comply with the ATO's requirements. This includes:
- Indicating the GST amount on the invoice
- Providing your business details and ABN
- Specifying the nature of the service provided
- Including the total cost of the service, GST-inclusive
Ensuring your invoices are compliant can streamline payment and reduce disputes regarding GST charges.
Challenges for NDIS providers regarding GST
1. Understanding NDIS pricing arrangements
Navigating the NDIS pricing arrangements can be complex, especially regarding GST implications. Providers must stay up-to-date with the latest pricing arrangements published by the NDIS.
These arrangements outline the maximum prices that can be charged for services, including GST considerations. If providers charge above the set rates, they may face compliance issues or funding disputes with NDIS participants.
2. Managing exemptions and compliance
Determining which services are exempt from GST can be challenging. Providers must diligently review their offerings and comply with the ATO guidelines.
Incorrectly classifying services could lead to financial penalties or loss of NDIS funding. Providers should regularly consult with tax professionals or accountants who understand the NDIS framework and GST obligations to mitigate these risks.
Key takeaways
Navigating GST within the NDIS framework can be complex, but understanding the requirements is essential for providers and participants. Most NDIS services are subject to GST, and providers must register for GST if their turnover exceeds the threshold.
Being aware of taxable and exempt supplies is crucial, as is fulfilling compliance obligations, including submitting accurate BAS and issuing compliant invoices.
By staying informed and seeking guidance when necessary, NDIS providers can ensure they meet their GST obligations, minimise risks, and deliver essential services to their clients.
If you need assistance with NDIS accounting or navigating GST requirements, consider using Thriday which can handle all your NDIS banking, accounting and tax needs.
DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360 AFSL 241167 (Regional Australia Bank). Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you. Team Thrive No 2 Pty Ltd ABN 26 677 263 606 (Thriday Accounting) is a Registered Tax Agent (No.26262416).