7.a.8. What is the appropriate process for determining the GST status of financial assistance to doctors administered by the Department of Health and Community services?
For source of ATO view, refer to:
- GSTR 2012/2 – Goods and services tax: financial assistance payments
- Part 3 of GSTR 2006/9 – Goods and services tax: supplies.
GSTR 2012/2 addresses financial assistance payments and provides information for determining whether the financial assistance is a taxable supply. This Ruling examines the elements of section 9-5 which deals with taxable supplies.
Whilst the Ruling examines all of the elements of a ‘taxable supply’ and looks at various types of grants, many of the issues in relation to providing funds to doctors relate to:
- whether the funds provided are consideration for a supply by the doctor to the grantor, or
- whether the funds provided are consideration for a supply by the doctor to a patient.
Generally, and without limiting the effect of GSTR 2012/2, where consideration is provided by a third party for a GST-free supply from a doctor to a specific patient, the funds provided will not be consideration for a supply by the doctor to the third party payer. Section 9-15(2) states that it does not matter who provides the consideration. For example, Medicare may provide the consideration for the supply of medical services by a doctor to a specific patient and this will not be a supply by the doctor to Medicare.
However, it should be noted that performance of a service by a doctor on a patient will not always represent a supply from the doctor to the patient. In some circumstances, the doctor will be making a supply to another entity (for example a hospital) and that other entity will make the supply to the patient but the doctor performs the service on the patient. In this situation, the supply is by the doctor to the other entity and is a taxable supply where the other elements of section 9-5 are satisfied. In some instances, depending on the arrangement or framework, the medical practitioner may make a supply to both the other entity and the patient. Refer to Issues 1.a.6. and 1.a.13 for further explanation.
From 1 July 2012, where the other entity is an insurer, an operator of a statutory compensation scheme or compulsory third party scheme (scheme operator), or an Australian government agency, the supply to the other entity will be GST-free to the extent that the underlying supply of the health service to the patient is a GST-free health supply under Subdivision 38-B (section 38-60). For administrative ease however, the parties may agree for the supply to the other entity, or supplies of a kind that include that supply, not to be treated as GST-free (section 38-60(4)).
If the funds provided are for the purpose of providing services to patients in general (including entry into an obligation to provide services) or for assisting in the operation of the practice or for the provision of information to the third party, then it is considered that this is not consideration for a supply to a patient. Generally, and without limiting the effect of GSTR 2012/2, it would be expected that the funds provided will be consideration for a supply by the doctor to the grantor and will be a taxable supply where the other elements of section 9-5 are satisfied.
Where the status of the funds provided are not addressed above, reference should be made to GSTR 2012/2. If the GST status is not apparent from reading the Ruling, it is suggested that the doctor request a private ruling.