GST Output Tax: Provision of subsidised services

Key requirements

For childcare and training, a subsidy awarded to the registered provider so it can offer a lower service price generally means GST is charged on the subsidised net fee. A subsidy awarded to an eligible parent, child or trainee to help pay the fee instead leaves GST chargeable on the full fee before subsidy. The result does not change merely because the customer’s subsidy is paid directly into the provider’s bank account. Review the award terms and distinguish who is entitled to the assistance from who receives the cash. The examples concern the service price and subsidy recipient; they should not be read as a blanket exemption for grant-funded services. Link the subsidy documents and invoice calculation to the service supplied.