7.a.16. Does GST apply to the facility fee charged by a hospital when a salaried staff specialist exercises a right of private practice and earns fees from private patients?

Non-interpretative – straight application of the law.

On occasion, a medical practitioner will be able to exercise a right of private practice in a hospital. The medical practitioner sees private patients and the hospital may collect the fees from the provision of the medical service. The hospital may retain a certain portion of the total fees which relate to the provision of the facility to the medical practitioner.

In this situation, the total fees for the provision of the medical services are included in the turnover of the medical practitioner. Generally, these fees will be GST-free under section 38-7.

Also, the facility fee retained by the hospital may be consideration for a taxable supply by the hospital to the medical practitioner. In this case, the amount which is retained will include a GST component which will be one-eleventh of the total amount retained.