OT NDIS service agreement GST requirements

The short answer

An occupational therapist's NDIS supports are GST-free under section 38-38 of the A New Tax System (Goods and Services Tax) Act 1999 only if four conditions are met, and one of them is a written agreement. The agreement must identify the participant and state that the supply is a reasonable and necessary support in their NDIS plan. Without it, GST may apply.

Sources
A New Tax System (Goods and Services Tax) Act 1999 (Cth), section 38-38
A New Tax System (Goods and Services Tax) (GST-free Supply National Disability Insurance Scheme Supports) Determination 2021
Australian Taxation Office, National Disability Insurance Scheme GST guidance
NDIS Quality and Safeguards Commission, service agreement guidance

The four conditions

Section 38-38 makes a supply to an NDIS participant GST-free when the participant has an NDIS plan in effect, the supply is of reasonable and necessary supports specified in the statement of participant supports in that plan, there is a written agreement between the provider and the participant or another person on their behalf, and the supply is of a kind covered by the A New Tax System (Goods and Services Tax) (GST-free Supply National Disability Insurance Scheme Supports) Determination 2021. Occupational therapy, assessments and therapy assistant supports fall within the tables in the Determination. All four conditions must be met for each supply.

What the written agreement must say

The Australian Taxation Office says the written agreement must identify the participant and state that the supply is one or more of the reasonable and necessary supports specified in the participant's plan. It can be with the participant, a nominee, a parent or a plan manager, but it must create a legally binding obligation to make the supply. A signed service agreement is the usual form. The ATO accepts other written evidence, such as an exchange of emails plus a quote, if together they show the obligation and the link to the plan. Keep the agreement on file for five years with your other GST records.

Practical drafting for OTs

Name the participant and their NDIS number, describe the supports in words that match the plan categories such as Improved Daily Living, list the items you will claim including non face to face time, provider travel and reports, state your rates at or below the NDIS Pricing Schedule limits, and include a clause that the supports are reasonable and necessary supports under the participant's plan. Add start and review dates so the agreement stays current across plan reassessments. The NDIS Quality and Safeguards Commission also expects service agreements to explain cancellation terms, complaints and how to end the agreement.

Common traps

GST-free status is lost if you invoice before the agreement exists, if the plan has ended, or if you charge for something outside the plan such as a private report for a court or employer. Charging GST on a GST-free NDIS supply is also a problem, because the participant's funding is then overspent. If you are not registered for GST because your turnover is under the threshold, you do not charge GST on anything, but the written agreement is still required by the NDIA and the Commission. The 2021 Determination applies to supplies made before 1 July 2027, so check for a replacement instrument in the lead up to that date.

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