• GST and medical services

     

    Attention

    This fact sheet only covers medical services. For information about the GST treatment of other health services, refer to GST and other health services .

    Terms we use

    When we say:

    • patient, we mean the recipient of the supply of medical services.
    • medical services, we mean
      • a service for which a Medicare benefit is payable
      • any other service supplied by or on behalf of a medical practitioner or approved pathology practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the patient.
       
    End of attention

    What medical services are GST-free?

    Medical services you supply are GST-free if a Medicare benefit is payable for the service.

    If a Medicare benefit is not payable, the medical service is still GST-free if both of the following apply:

    • you perform it, or it is performed on your behalf
    • it is generally accepted by the medical profession as a necessary and appropriate treatment for the patient.

    Under some multi-party arrangements, the medical practitioner may make supplies of medical services to both the patient and to a third party, such as a health insurance fund. For more information, see When is a supply of medical services to a third party GST-free?

    From 1 July 2012, where a supply of a medical service made to an individual is GST-free, that supply will also be GST-free where the recipient of the supply is an:

    • insurer in settling a claim under an insurance policy
    • operator of a statutory compensation scheme
    • operator of a compulsory third party scheme
    • Australian government agency.

    What medical services are not GST-free?

    Some medical services you supply are not GST-free, including cosmetic procedures where no Medicare benefit is payable - for example, removal of a tattoo.

    When is a service performed on your behalf?

    A service is performed on your behalf if:

    • it is billed in your name and you accept full responsibility for the service
    • it is part of the service you provide
    • you are involved in at least part of that particular service.

    Example 1: GST-free service

    Dr Jones, a medical practitioner, employs Angela, a nurse. Angela bandages Dr Jones' patient as part of the overall GST-free service Dr Jones provides to the patient. Because Angela performs the bandaging on behalf of Dr Jones, the bandaging is also GST-free.

    End of example

    Referrals

    When you refer a patient to another person, such as a specialist, that person's service is not:

    • performed on your behalf
    • part of your supply.

    The service provided by the second person must be considered separately to work out if it is GST-free.

    Example 2: referrals to another person

    Dr Jones refers a patient to a physiotherapist. The GST status of Dr Jones' service and the physiotherapist's service must be considered separately.

    End of example

    What is appropriate treatment?

    For GST purposes, you are supplying appropriate treatment when you use your professional skills to:

    • assess a patient's health
    • work out a course of action to preserve, restore or improve the patient's physical or psychological wellbeing, as far as your training allows
    • supply a treatment that is generally accepted by your profession as being appropriate for the patient.

    Appropriate treatment includes preventative medicine. For example, childhood immunisations are considered to be appropriate treatments for children.

    When is a supply of medical services to a third party GST-free?

    In some instances, supplies of medical services are made under multi-party arrangements, where the medical service is provided to a patient but is organised and paid for by a third party.

    Where the third party is an insurer, an operator of a statutory compensation scheme or compulsory third party scheme (scheme operator), or an Australian government agency, the medical practitioner may make a supply to both the patient and the third party.

    From 1 July 2012, where a supply is made to the insurer, the scheme operator or the Australian government agency, the supply is GST-free to the extent that the underlying supply of medical services to the patient is GST-free.

    Example 3: GST-free supplies to a third party

    ABC Health Fund has a pre-existing agreement with a medical practitioner for services supplied to settle claims made under their insurance policies. The agreement outlines what both parties need to do when the medical practitioner treats an ABC Health Fund member. It also outlines that the payment to the medical practitioner from ABC Health Fund is for their supply of treatment services to the ABC Health Fund member.

    The supply by the medical practitioner to ABC Health Fund is GST-free to the extent that the supply of the treatment to the ABC Health Fund member is a GST-free supply of medical services.

    End of example

    However, where a third party other than an insurer, a scheme operator or an Australian government agency is the recipient of the supply of a medical practitioner's services, the medical service will not be GST-free.

    Where a supply is not made to a third party (for example the third party is merely paying the medical practitioner on behalf of the patient), the supply is GST-free to the patient where either:

    • a Medicare benefit is payable for the service
    • you perform it, or it is performed on your behalf, and it is generally accepted by the medical profession as a necessary and appropriate treatment for the patient.

    Are medical reports you supply GST-free?

    A medical report you supply is only GST-free where a Medicare benefit is payable for it.

    If a Medicare benefit is not payable for a report you supply, the report is taxable.

    For example, if you supply a report to a third party (such as an insurance company or solicitor acting in a personal injury case), the service is not for the appropriate treatment of a patient and the report is taxable.

    This applies if the medical practitioner provides the report to the patient, or directly or indirectly to the third party.

    Are routine check-ups GST-free?

    A routine check-up you supply is GST-free if a Medicare benefit is payable for it.

    If you supply a medical service for which no Medicare benefit is payable, the service is GST-free if both of the following apply:

    • you perform it, or it is performed on your behalf
    • it is generally accepted by the medical profession as being a necessary and appropriate treatment for the patient.

    Procedures such as pap smears, breast cancer screening and vaccinations are GST-free.

    Are goods you supply GST-free?

    Goods you supply are GST-free if both of the following apply – they are:

    • part of a GST-free medical service
    • supplied at the same time and place as the service.

    The goods must be either:

    • specific to treating the illness or disability of each particular patient
    • essential for treating that patient during their particular medical service.

    Example 4: supply of goods to a patient

    Dr Jones treats a patient's injury during a consultation by applying a bandage. If the consultation is GST-free, the bandage is also GST-free. However, extra bandages, dressings and antiseptics the patient takes home are not GST-free.

    End of example

    More information

      Last modified: 24 May 2014QC 16263