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NDIS SDA – GST Free ATO Advice to date – Part 2

by | Jun 19, 2023 | NDIS SDA GST Free, Property

Latest view to claiming GST on NDIS SDA Properties

Read part 1 here (opens in a new tab)

  • investors in NDIS SDA Properties need to
    • An SDA Registered Provider with NDIA having a direct management relationship with the NDIS SDA Participant, as the direct Lessor to the NDIS SDA Participant as Lessee.
      • To be seen as providing a GST Free Supply directly to NDIS SDA Participants, not via an intermediary SDA Provider, unless registered also with NDIA.
      • To be able to claim GST on the supply of an NDIS SDA Property.

Compliance Cost – NDIS SDA Registered Provider

The cost and time to get SDA Registered via the NDIA are unclear, indications provided to us from existing SDA Registered Providers indicate the process could take up to 12 months, and cost in excess of $10,000 to set up policies, and procedures for NDIA compliance.

Thereafter with an annual compliance cost of $5,000 plus for the annual audit and compliance maintenance.

The GST Claimed on a single property may only cover the compliance cost over the life of the investment!

Once an investor is SDA Registered, the ATO will allow a more experience SDA Registered Provider to act as an agent when dealing with participants.

If the investor is only got one property, the setup compliance cost may be too great to chase the GST Refunds, if however you are building a complex, or are obtaining a number of properties. The time and cost of SDA Registration may be worth the cost and wait.

Investors will need to spend the time to get personally compliant.

Below is the latest ATO interpretation of the NDIS SDA legislation, providers of NDIS SDA are registered with the NDIA personally, leasing to a third-party SDA Provider, who then leases to the ultimate NDIS SDA Participant is a supply to the SDA Provider, not the SDA Participant.

So is seen as an input tax supply.

We are investigating with other professionals on this matter, in particular for NDIS SDA Participants being also SDA Registered Providers for their own accommodation.

Is there a workable solution for

  • NDIS SDA Participants being SDA Providers also
  • Landlords of NDIS SDA Properties obtaining SDA Provider Registration
    • If there is only one property the compliance cost may be too high to pursue the GST Credits on offer.
    • It would appear the ATO is trying to limit any GST benefits to the bigger end of town – not for profits organisations, or those with a sizable NDIS SDA Portfolio to justify the compliance cost of dealing with NDIA.

Please see the latest NDIS SDA Tax Rulings.

In summary

  • SDA Provider needs to be an SDA Registered Provider with NDIA
  • A none SDA Registered Provider cannot use an SDA Reg Provider as an Agent to provide SDA Accommodation as a GST Free Supply
  • None SDA Provider – leases to SDA Registered Provider – subleases to NDIS SDA Participant
  • the first lease is input tax supply
  • the second lease is a GST Free Supply
  • NDIS SDA Accommodation is not viewed as Commerical residential property, not otherwise seen as a GST Supply under the Commerical residential supply exception for otherwise residential supplies being input tax supply.

Solution Required

  • Can investors in SDA Accommodation obtain SDA Provider Registration with NDIA?
  • Can existing SDA Registered Providers provide assistance to none SDA Providers getting SDA Registration with NDIA?
  • So established SDA Registered Providers can act as agents for newly registered SDA Providers that otherwise only have one property to manage.
  • Can investors in SDA Accommodation obtain SDA Provider Registration with NDIA?
  • Can existing SDA Registered Providers provide assistance to none SDA Providers getting SDA Registration with NDIA?
  • So established SDA Registered Providers can act as agents for newly registered SDA Providers that otherwise only have one property to manage.

Please read the ruling as highlighted and consider it.

https://umbrellaaccountants.com.au/wp-content/uploads/2023/06/1.-GST-Free-Supply-SDA-Provider.pdf

https://umbrellaaccountants.com.au/wp-content/uploads/2023/06/2.-SDA-Provider-To-Be-Registered-Lessor.pdf

https://umbrellaaccountants.com.au/wp-content/uploads/2023/06/3.-SDA-Provider-Registered-NDIA.pdf

https://umbrellaaccountants.com.au/wp-content/uploads/2023/06/4.-SDA-Reg-Provider-As-Agent.pdf

https://umbrellaaccountants.com.au/wp-content/uploads/2023/06/5.-If-SDA-Provider-is-Not-Registered-1.pdf

If you would like to discuss this further, please feel free to book a meeting online.

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