Providing GST-free supplies to NDIS participants

If you supply goods or services to participants of the National Disability Insurance Scheme (NDIS), you need to understand when your supplies are GST-free.

If you get it wrong, you could be overcharging a disability participant, under-remitting to the ATO, or missing out on input tax credits you’re entitled to claim.

With the NDIS under heightened scrutiny, now is a good time to review your invoices and ensure compliance.

Key information:

• Supplies to NDIS participants may be GST-free.
• A supply to an NDIS participant is only GST-free if specific conditions are met.
• Providers making mixed supplies (some GST-free, some taxable) must correctly classify and separately account for each type.
• Getting the classification wrong in either direction creates compliance risk.
• Manual workarounds to apply the correct GST treatment are a red flag.
• We recommend you regularly review your GST configuration in your ERP or accounting systems.

When is a supply to an NDIS participant GST-free?

Many goods and services are GST-free under Subdivision 38-B of the GST Act when supplied to an NDIS participant. This means the supplier has no liability to pay any GST on its receipts and can claim full GST credits for any taxable NDIS-related expenses.

However, NDIS government funding for some disability support types is not provided to suppliers and is instead provided to the NDIS participant (that is, the person with a disability) or another person managing the funding for the participant.

Additionally, for many businesses, NDIS clients are only part of their customer base, and as such they are providing a mixed service line when it comes to GST.

For a supply to be GST-free all four of the following conditions must be satisfied:

Condition 1: The recipient must be an NDIS participant with an active plan

• The person must be formally registered as an NDIS participant and their plan must be approved by the NDIA and currently active (i.e., it can’t be expired, suspended, or yet to commence.)
• Supplies made to individuals who do not have an active NDIS plan (including people with disability who receive other forms of support) do not qualify for GST-free status under section 38-38.
• If a participant's plan lapses or is under review, the GST-free status of your supplies may be affected during that period.

Condition 2: The supply must be of reasonable and necessary supports specified in the plan

• The support you supply must actually be specified in that individual's plan. Not every service a participant might want or need will be listed.
• If the plan specifies a particular quantity or timeframe of support (for example, 10 hours of personal care per week), any supplies beyond that specified amount are not GST-free, even if the type of service would ordinarily qualify.

Condition 3: There must be a written agreement

There must be a written agreement between you (the supplier) and either the NDIS participant or another person acting on their behalf (such as a registered plan management provider, or a guardian). The written agreement must:

• Identify the NDIS participant
• State that the supply is of one or more of the reasonable and necessary supports specified under the NDIS Act.

This agreement does not need to be a single formal document. A combination of documents can satisfy this requirement, provided the totality of documentation meets both requirements above.

Condition 4: The supply must be covered by the NDIS Determination

The supply must be of a kind covered by the NDIS Determination 2021 in either Table 1 or Table 2, detailed below. Understanding which table your services fall under — and whether any additional conditions apply — is essential before applying GST-free treatment to any supply.

Table 1 Supplies covered by 38-38 of the GST Act. 

• Specialist disability accommodation or accommodation assistance.
• Assistance with daily life tasks, including in a group or shared living arrangement
• Household tasks
• Assistance with and training in travel/transport arrangements, excluding taxi fares
• Interpreting and translation
• Help to access and maintain education and employment
• Assistive equipment for recreation
• Early intervention supports for early childhood
• Plan management services

Table 2 includes supplies of supports covered by other determinations

Table 2 covers an additional set of support categories, but these are only GST-free if the supply is also covered by one of three other legislative instruments (or a later replacement determination):

• Schedule 1 to the GST-free Supply (Care) Determination 2017
• Section 6 of the A New Tax System (Goods and Services Tax) (GST free Supply-Residential Care-Government Funded Supplier) Determination 2015
• Section 6 or 7 of the GST-free Supply (Health Services) Determination 2017

Table 2 support classes include:

• Assistance with daily personal activities
• Specialised assessment and development of daily living and life skills
• Behavioural support and therapeutic supports
• Home modifications
• Assistive equipment for general tasks and leisure

Recommendations for suppliers of NDIS support services

• Create an onboarding process for NDIS participants that confirms the supply is in the participant’s plan and entails written agreements that provides a clear rationale for GST-free vs taxable treatment for each service type supplied.
• Escalate grey areas early (before billing): where plan wording is unclear, supports are bundled, or you suspect a service is outside the Determination, seek advice and document the outcome.
• Regularly review the GST classification of supplies made to NDIS participants (GST-free, taxable, or outside the scope of GST). Where invoices or receipts relate to more than one GST treatment, apportion revenue between these supply types on a reasonable basis and retain the working papers.
• Review and update the GST rules configured in your ERP/accounting system to reflect current GST guidance. Treat manual workarounds as a “red flag” that your controls may not be robust enough and could benefit from more automated controls. Manual overrides can increase the risk of GST errors and may not satisfy ATO scrutiny.
• Verify that you remain eligible to use the cash basis as your GST accounting method. If your GST turnover exceeds $10m, you must account for GST on an accrual basis.
• Adopt minimum tax governance standards, such as developing a BAS procedure manual, embedding regular book-to-tax comparisons in your processes and controls, and mapping key processes (for example, procure-to-pay and order-to-cash) to clarify responsibilities and control points.

RSM has experience in helping NDIS providers navigate tax compliance and secure GST-free entitlements.

If you are a supplier of disability support services to NDIS participants and would like to clarify your situation, please contact Louis Carney or Sam Mohammad of RSM Australia.