2 Follow-up consultation - the GP | Australian Taxation Office

2 Follow-up consultation - the GP

Activity	Supply and recipient of supply	Supply and GST status	Comments
2.1. Jane returns to her GP's surgery after three days. Jane's hand has become infected. Her GP decides an x-ray is required to see if there are foreign objects in the wound. Jane tells her GP that the injury took place at work and advises the GP that her employer's Workers' Compensation Insurer (WCI) is ABC Insurance (ABC). Her GP sends an invoice to ABC for the consultation.	Consultation: Jane only; or both Jane and ABC	Consultation: GST-free (unless the GP and ABC agree not to treat any supply to ABC as GST-free)	The supply is only to Jane and no supply to ABC: The service of examining Jane's hand and coming up with appropriate treatment options is a GST-free medical service. The supply of the medical service by the GP will be GST-free irrespective of whether Jane or ABC is invoiced. There is a supply to both Jane and ABC: In some cases, health service providers will have arrangements with third parties, such as insurers. These arrangements may require the GP to get approval from the insurer before they treat a patient. A pre-existing arrangement dictates how all parties must act for the treatment of individuals covered by insurance policies. Depending on the arrangements, the GP may make supplies to both ABC and Jane. The GP will be making a supply to ABC where, pursuant to an agreement between ABC and the GP, there is a binding obligation on the GP to provide medical services to the patient (in this case, Jane). In the absence of a binding obligation, there may still be a supply by the GP to ABC where the factors listed in paragraph 221B of GSTR 2006/9 are present. Where the payment comes from an insurer to settle a claim under an insurance policy, the supply to the insurer will be GST-free because the underlying supply of medical services to the patient is GST-free. The service of examining Jane's hand and coming up with appropriate treatment options is a GST-free medical service. As the supply of the underlying medical service to Jane is GST-free, the supply of the service to ABC of making that supply to Jane will also be GST-free. The GP and ABC may agree not to treat the supply as GST-free. For example, where there is a combination of GST-free and taxable supplies and determining the amounts for each is complex, it may be administratively easier for the parties to agree to not treat any of the supplies as GST-free.
2.2. During the consultation, the GP writes a referral to a radiologist. The GP advises the radiologist that Jane is a workers compensation claimant and that her insurer is ABC.	Referral: Jane only; or both Jane and ABC	Referral: GST-free (unless the GP and ABC agree not to treat any supply to ABC as GST-free)	The GP's referral is part of Jane's treatment and is a GST-free supply to Jane. This applies irrespective of whether Jane or ABC is invoiced. Where a supply is also made to ABC, the supply will be GST-free as the underlying supply to Jane is GST-free. As discussed in 2.1, where the supply is to ABC, the GP and ABC may choose not to treat it as GST-free.
2.3. During the consultation, in accordance with relevant State or Territory law, the GP completes a workcover claim form, notifying Jane's employer and ABC about Jane's injuries. The GP spends three minutes completing the claim form and hands the workcover claim form to Jane. The GP does not separately invoice ABC for the preparation of the workcover claim form, and merely increases their normal consultation fee by $3 for preparing the form.	The workcover claim form is not treated as a separate supply	The workcover claim form is not treated as a separate supply	In this case, the supply of the workcover claim form is integral, ancillary or incidental to the supply of the consultation; it is not treated as a separate supply. Where the GP provides actual treatment to a patient and also prepares a workcover claim form during a consultation for a single fee, the GP will need to determine whether they have made a mixed supply or a composite supply. A mixed supply is a supply consisting of at least one taxable and one non-taxable part, each of which is separately identifiable. A part of a supply will be recognised as separately identifiable if it is not integral, ancillary or incidental to another part of the supply. A composite supply is a supply with one identifiable/recognisable part, but also includes another supply that is not recognised in its own right - it is integral, ancillary or incidental to the dominant part of the supply. Part of a supply may be considered integral, ancillary or incidental where it: (a) is necessary or it contributes to the supply as a whole, but cannot be identified as the dominant part of the supply (b) contributes to the proper performance of the contract to supply the dominant part (c) does not constitute for customers an aim in itself, but is a means of better enjoying the dominant thing supplied, and/or (d) takes up a marginal proportion of the total value of the package compared to the dominant part. Preparation of a workcover claim form does not satisfy (a) - (c). Accordingly, for a supply of a workcover claim form to be integral, ancillary or incidental, it must satisfy (d) and take up a marginal proportion of the total value of the total supply. Further, the ATO accepts that the GP may treat a supply of a workcover claim form as integral, ancillary or incidental to a supply of a consultation, if the consideration for it does not exceed the lesser of: $3.00, or 20% of the consideration for the total supply. For example, when the GP provides treatment and also prepares a workcover claim form for a single fee and that fee is not increased by more than $3.00 for the workcover claim form, the supply of the workcover claim form is integral, ancillary or incidental to the supply of treatment. However, where the GP charges more than $3.00 more than the GP's normal consultation fee, and neither to consultation nor the workcover claim form is integral, ancillary or incidental to the supply of the other, the GP must apportion the fee charged between the provision of treatment and the preparation of the workcover claim form. The method of apportionment will need to be on a reasonable basis. A reasonable basis will be one which does not favour either the GST-free part, or the taxable part over the other part of the supply. Each case will need to be determined on its own merits. One reasonable basis may be: (Time per activity / Total time of all activities) X total fee charged The GP will be liable to remit 1/11th of the proportion of the fee allocated to the preparation of the report to the ATO. GST public ruling GSTR 2001/8 provides assistance on apportioning the consideration for a supply that includes taxable and non-taxable parts.

Activity

Supply and recipient of supply

Supply and GST status

Comments

2.1. Jane returns to her GP's surgery after three days.

Jane's hand has become infected. Her GP decides an x-ray is required to see if there are foreign objects in the wound.

Jane tells her GP that the injury took place at work and advises the GP that her employer's Workers' Compensation Insurer (WCI) is ABC Insurance (ABC).

Her GP sends an invoice to ABC for the consultation.

Consultation: Jane only; or both Jane and ABC

Consultation: GST-free (unless the GP and ABC agree not to treat any supply to ABC as GST-free)

The supply is only to Jane and no supply to ABC:

The service of examining Jane's hand and coming up with appropriate treatment options is a GST-free medical service.

The supply of the medical service by the GP will be GST-free irrespective of whether Jane or ABC is invoiced.

There is a supply to both Jane and ABC:

In some cases, health service providers will have arrangements with third parties, such as insurers. These arrangements may require the GP to get approval from the insurer before they treat a patient. A pre-existing arrangement dictates how all parties must act for the treatment of individuals covered by insurance policies.

Depending on the arrangements, the GP may make supplies to both ABC and Jane.

The GP will be making a supply to ABC where, pursuant to an agreement between ABC and the GP, there is a binding obligation on the GP to provide medical services to the patient (in this case, Jane).

In the absence of a binding obligation, there may still be a supply by the GP to ABC where the factors listed in paragraph 221B of GSTR 2006/9 are present.

Where the payment comes from an insurer to settle a claim under an insurance policy, the supply to the insurer will be GST-free because the underlying supply of medical services to the patient is GST-free.

The service of examining Jane's hand and coming up with appropriate treatment options is a GST-free medical service.

As the supply of the underlying medical service to Jane is GST-free, the supply of the service to ABC of making that supply to Jane will also be GST-free.

The GP and ABC may agree not to treat the supply as GST-free. For example, where there is a combination of GST-free and taxable supplies and determining the amounts for each is complex, it may be administratively easier for the parties to agree to not treat any of the supplies as GST-free.

2.2. During the consultation, the GP writes a referral to a radiologist. The GP advises the radiologist that Jane is a workers compensation claimant and that her insurer is ABC.

Referral: Jane only; or both Jane and ABC

Referral: GST-free (unless the GP and ABC agree not to treat any supply to ABC as GST-free)

The GP's referral is part of Jane's treatment and is a GST-free supply to Jane. This applies irrespective of whether Jane or ABC is invoiced.

Where a supply is also made to ABC, the supply will be GST-free as the underlying supply to Jane is GST-free.

As discussed in 2.1, where the supply is to ABC, the GP and ABC may choose not to treat it as GST-free.

2.3. During the consultation, in accordance with relevant State or Territory law, the GP completes a workcover claim form, notifying Jane's employer and ABC about Jane's injuries.

The GP spends three minutes completing the claim form and hands the workcover claim form to Jane. The GP does not separately invoice ABC for the preparation of the workcover claim form, and merely increases their normal consultation fee by $3 for preparing the form.

The workcover claim form is not treated as a separate supply

In this case, the supply of the workcover claim form is integral, ancillary or incidental to the supply of the consultation; it is not treated as a separate supply.

Where the GP provides actual treatment to a patient and also prepares a workcover claim form during a consultation for a single fee, the GP will need to determine whether they have made a mixed supply or a composite supply.

A mixed supply is a supply consisting of at least one taxable and one non-taxable part, each of which is separately identifiable. A part of a supply will be recognised as separately identifiable if it is not integral, ancillary or incidental to another part of the supply.

A composite supply is a supply with one identifiable/recognisable part, but also includes another supply that is not recognised in its own right - it is integral, ancillary or incidental to the dominant part of the supply.

Part of a supply may be considered integral, ancillary or incidental where it:

(a) is necessary or it contributes to the supply as a whole, but cannot be identified as the dominant part of the supply
(b) contributes to the proper performance of the contract to supply the dominant part
(c) does not constitute for customers an aim in itself, but is a means of better enjoying the dominant thing supplied, and/or
(d) takes up a marginal proportion of the total value of the package compared to the dominant part.

Preparation of a workcover claim form does not satisfy (a) - (c). Accordingly, for a supply of a workcover claim form to be integral, ancillary or incidental, it must satisfy (d) and take up a marginal proportion of the total value of the total supply.

Further, the ATO accepts that the GP may treat a supply of a workcover claim form as integral, ancillary or incidental to a supply of a consultation, if the consideration for it does not exceed the lesser of:

$3.00, or
20% of the consideration for the total supply.

For example, when the GP provides treatment and also prepares a workcover claim form for a single fee and that fee is not increased by more than $3.00 for the workcover claim form, the supply of the workcover claim form is integral, ancillary or incidental to the supply of treatment.

However, where the GP charges more than $3.00 more than the GP's normal consultation fee, and neither to consultation nor the workcover claim form is integral, ancillary or incidental to the supply of the other, the GP must apportion the fee charged between the provision of treatment and the preparation of the workcover claim form.

The method of apportionment will need to be on a reasonable basis. A reasonable basis will be one which does not favour either the GST-free part, or the taxable part over the other part of the supply. Each case will need to be determined on its own merits. One reasonable basis may be:

(Time per activity / Total time of all activities) X total fee charged

The GP will be liable to remit 1/11th of the proportion of the fee allocated to the preparation of the report to the ATO.

GST public ruling GSTR 2001/8 provides assistance on apportioning the consideration for a supply that includes taxable and non-taxable parts.

Last modified: 08 Aug 2019QC 16370