• 2.b. Goods supplied ‘in the course of supplying’ a GST-free ‘other health service’.

    For source of ATO view, refer to issue 1.c of this issues register.

    Section 38-10(3) provides that the supply of goods will be GST-free if:

    1. it is made to a person in the course of supplying to the person a service the supply of which is GST-free under subsection (1) (other than a service referred to in item 8, 9, 12 or 15 of the table in subsection (1)), and
    2. it is made at the premises at which the service is supplied.

    The services excluded from this provision which are referred to in item 8, 9, 12 and 15 are ‘Herbal medicine (including traditional Chinese herbal medicine)’, ‘Naturopathy’, ‘Optometry’ and ‘Pharmacy’.

    Section 38-10(4) provides that a supply of goods will be GST-free if:

    1. it is made to a person in the course of supplying to the person a service referred to in item 8 or 9 of the table in subsection (1), and
    2. it is supplied, and used or consumed, at the premises at which the service is supplied.

    The services included in this provision are ‘Herbal medicine (including traditional Chinese herbal medicine)’ and ‘Naturopathy’.

    The phrase ‘in the course of supplying to the person a service’ in the context of section 38-10(3) and 38-10(4) is interpreted to require that the goods are supplied at the same point in time at which the identified GST-free ‘other health service’ is supplied. These identified GST-free ‘other health services’ are for section 38-10(3) (that is items 1-7, 10, 11, 13, 14, and 16-21 of the Table in section 38-10), and for section 38-10(4) – ‘Herbal medicine (including traditional Chinese herbal medicine)’ and ‘Naturopathy’.

    In addition the goods will have to have been either:

    1. customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free ‘other health service’, or
    2. necessarily utilised as an integral part of the patient’s treatment required immediately during that specific consultation.

    As stated for section 38-10(4), additionally the goods must be ‘used or consumed’ at the premises as described below in Issue 2.c.

    In the course of supplying’, as the phrase appears in section 38-10(3) and section 38-10(4), has the same meaning as in section 38-7(3). However, section 38-10(4) has an additional requirement that the goods supplied must also be ‘used or consumed, at the premises at which the service has been supplied’.

    Related questions

    The following questions explore what is within the concept of goods supplied ‘in the course of supplying’ an ‘other health service’, for the purposes of section 38-10. None of the questions and answers should be read in isolation but rather as part of the whole of the information contained in this document.

      Last modified: 16 Oct 2013QC 16330