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Supporting an NDIS provider to meet SDA classification for GST-free entitlements
This client is a provider of essential support and services to individuals with disabilities, ensuring their inclusion and participation in the community. Navigating the complexities of GST and understanding the requirements under the National Disability Insurance Scheme (NDIS) proved to be a daunting task for the organisation. This case study highlights the challenges faced by our client and how RSM helped them overcome these obstacles.
NDIS provider’s challenge with GST classification
When our client encountered difficulties with GST classification for their services, they realised they needed expert assistance.
As a specialist disability accommodation (SDA) provider, our client faced challenges in ensuring the SDA services they provided met the strict requirements necessary to be considered GST-free under the NDIS provisions.
Failure to accurately classify their services could result in incorrect invoicing, potential overcharging, penalties and interest due to non-compliance with NDIS provisions and legislated guidelines.
This client needed to determine whether their services were GST-free, taxable, input-taxed, or outside the scope of GST, which was crucial for meeting their GST liabilities and determining their entitlement to input tax credits (ITCs or GST credits)
RSM is a trusted advisory firm specialising in disability accommodation and tax matters. Our team of professionals worked closely with this client to understand their unique circumstances and provide tailored solutions to address the GST challenges they were facing.
Impact of GST misclassification on SDA Providers
Misclassification of GST can have significant implications for SDA providers. Incorrectly classifying services as GST-free when they are not eligible can result in them being liable for GST (without a mechanism to recover the GST from the recipient and therefore being out of pocket by an additional 10%) and being exposed to penalties and interest for potential non-compliance with the NDIS rules.
On the other hand, failing to identify services that are GST-free can lead to overcharging participants and damaging the provider's reputation. It is crucial for SDA providers to accurately classify their services for GST purposes to ensure compliance with the NDIS requirements contained in the GST Act and to maximise their entitlements to GST credits on permissible acquisitions.
RSM's tailored solutions for NDIS provider
Recognising the challenges faced by our client, RSM provided tailored solutions to help the organisation navigate the complexities of classification supplies made under the NDIS provisions for GST purposes.
In our work with this client, RSM provided detailed advice regarding the entitlement to classify the provider's supply of SDA and other NDIS-related supports as GST-free under various scenarios.
RSM's team of specialists conducted a thorough review of the organisation’s arrangements with participants and residents to accurately determine the nature of the supplies being made. This allowed us to provide customised advice for each supply, which is necessary due to the strictness in applying the GST-free provisions to SDA supplies. We worked closely with this client’s finance and accounting teams, providing guidance on invoicing, record-keeping, and compliance with the NDIS requirements.
The client prepared various possible scenarios of supplying accommodation and requested our assistance to review their classification for GST purposes (i.e., GST-free, taxable, input taxed, or outside the scope of GST). This classification is not only critical to assisting the client in meeting its GST liabilities but also to determine whether, and to what extent, it is entitled to GST credits for its related acquisitions.
The scope of our requested assistance extended to consider the GST classification of related supplies, such as board, management and transport.
In cases where the specific SDA-related provisions in the GST Act were not applicable, we explored whether any broader exemptions, such as those for charitable institutions, could apply to the supplies of accommodation and supports, making them GST-free for GST purposes.
Key outcomes
After conducting an in-depth review, RSM discovered that certain accommodation supply scenarios did not completely align with the stringent requirements outlined in the SDA and NDIS provisions of the GST Act. As a result, these scenarios did not qualify for GST-free classification. However, we recommended that other exemptions within the GST framework could potentially support the GST-free treatment.
Following our review, this client was able to update their accounting system with the accurate GST coding. This not only ensures compliance but also provides them with assurance regarding their GST liabilities and entitlement to GST credits for related acquisitions.
The partnership between this client and RSM resulted in improved financial management, streamlined invoicing processes, and enhanced confidence in their GST classification. Empowered with accurate knowledge and tools, our client can now face the future with confidence.
Key benefits for NDIS providers working with RSM:
- Tailored advice on the GST classification of SDA and NDIS-related supports, ensuring compliance with GST liabilities and accurate GST credit claims for permissible acquisitions.
- Comprehensive reviews of client arrangements to accurately determine the nature of supplies and entitlement to GST credits.
- Exploration of broader exemptions for GST-free treatment when specific provisions are not applicable.
- Assurance of correct GST coding in the client's accounting system.
Role of professional guidance in navigating GST and NDIS
The role of professional guidance is crucial in helping NDIS providers navigate the complexities of GST and the NDIS. Professionals like RSM have the expertise and experience to provide tailored solutions and support providers in accurately classifying their services, ensuring compliance with the NDIS requirements, and maximizing their entitlements. By partnering with a trusted advisor, providers can gain a comprehensive understanding of the GST obligations, streamline their financial management processes, and enhance their reputation as trusted suppliers of disability supports.
For NDIS providers seeking clarity on their GST obligations when providing NDIS and / or SDA supports, reaching out for professional support can pave the way for sustainable success and adherence to regulatory requirements.
As a full-service provider, RSM has the tools and experience to support disability service providers in navigating their GST liabilities and GST credit entitlements and more. The NDIS is a rapidly changing sector, filled with both challenges and opportunities. RSM has worked with many disability service providers, with a specialised team dedicated to helping you successfully navigate these changes. Reach out and connect with our NDIS team today.
