It is important to know the recipient of a health supply when determining its GST treatment.
The recipient of the supply is whoever engages the health practitioner to provide the service. In many cases, this will be the patient. However, in some cases, it will be a business. Supplies of services by a health practitioner to another business are not usually GST-free – see Supply of services through a third party.
Where a patient engages that other business to supply health services to him or her, the supply by that other business to the patient will be GST-free if the requirements of medical services or other health services are satisfied.
Example: GST-free service supplied by a business that engages a medical practitioner
GP Mega Clinic operates a medical clinic and contracts medical practitioners to provide services to its patient. A Medicare benefit is payable to the patient for the services performed by the medical practitioner.
The supply by the medical practitioner to GP Mega Clinic is not GST-free, except in specific situations.
The supply of the medical practitioner’s services by GP Mega Clinic to the patient is GST-free because a Medicare benefit is payable for that service.
End of exampleArrangements between clinics and health practitioners
Some health practitioners enter into arrangements with clinics for providing health services to patients. The health practitioner will perform the health services and the health clinic provides the rooms and administration. The health practitioner and the clinic may agree to split the patient fees between them.
There will be different GST outcomes depending on who is contracting who. This can only be determined by the contract entered into between the parties and contracts should clearly state who is contracting who so both parties are aware of the GST outcomes.
If the clinic contracts the health practitioner to provide services to the health clinic’s patient:
- the supply by the health practitioner to the clinic will not usually be GST-free except in specific situations – see Supply of services through a third party
- the supply of the health practitioner’s services by the clinic to the patient will be GST-free if the requirements of medical services or other health services are satisfied.
If the health practitioner contracts the clinic to provide rooms and administration services to the health practitioner:
- the supply of the rooms and administration services by the clinic to the health practitioner are not GST-free
- the supply by the health practitioner to the patient will be GST-free if the requirements of medical services or other health services are satisfied.