7.a.20. What is the GST status of services in the following scenarios? In each case the Clinic is a separate entity and is registered for GST, the massage therapist earns less than $75,000 and is not registered for GST and the services that are being supplied to the clients are not GST-free health supplies.

Non-interpretative – straight application of the law.

Scenario A

The health clinic contracts with the massage therapist to operate in the clinic. The massage therapist is operating as an independent practitioner treating his or her own clients (that is the clients are not clients of the clinic). The clinic makes bookings for the massage therapist and collects the fees for the massage therapist. The massage therapist then pays the clinic a percentage of their gross turnover as a rent/administration fee.

The massage therapist is supplying services to the clients which are not GST-free but, as the massage therapist is not registered and not required to be registered, the supply will not be subject to GST. Accordingly, the full amount of the fee from the client to the massage therapist will not be subject to GST.

The clinic is supplying administrative services to the massage therapist. The supply of these services will be subject to GST and the clinic as the supplier is liable for that GST. The amount of GST is one-eleventh of the amount retained by the clinic.

Scenario B

The health clinic contracts with the massage therapist to operate in the clinic. The massage therapist is operating as an independent practitioner treating his or her own clients (that is the clients are not clients of the clinic). The clinic makes bookings for the massage therapist and collects the fees for the massage therapist. The clinic retains a percentage of the fee as a rent/administration fee and pays the balance to the massage therapist.

The massage therapist is supplying services to the clients which are not GST-free but, as the massage therapist is not registered and not required to be registered, the supply will not be subject to GST. Accordingly, the full amount of the fee from the client to the massage therapist will not be subject to GST.

The clinic is supplying administrative services to the massage therapist. The supply of these services will be subject to GST and the clinic as the supplier is liable for that GST. The amount of GST is one-eleventh of the amount retained by the clinic.

Scenario C

The health clinic contracts the massage therapist as an independent practitioner to supply massage services to clients of the clinic (that is the clients are not clients of the massage therapist). The clinic makes bookings for massage services, collects the fees for the massage services and the income forms a part of the gross income of the clinic. The clinic then pays the massage therapist an agreed percentage of the fees collected for the massage services.

In this situation, there are two supplies. Firstly, the clinic is supplying services to the clients. The supply of these services are not GST-free and, as the clinic is registered, the supply will be subject to GST. Accordingly, the full amount of the fee paid by the client to the clinic will be subject to GST and the amount of GST is one-eleventh of that fee.

Secondly, the massage therapist is supplying services to the clinic. However, as the massage therapist is not registered and not required to be registered, the supply will not be subject to GST. Accordingly, the fee paid by the clinic to the massage therapist will not be subject to GST.

Scenario D

The health clinic employs the massage therapist to supply massage services to clients of the clinic (that is the clients are not clients of the massage therapist). The clinic makes bookings for massage services, collects the fees for the massage services and the income forms a part of the gross income of the clinic. The clinic then pays the massage therapist wages for the time worked.

In this situation, the clinic is supplying services to the clients. The supply of these services are not GST-free and, as the clinic is registered, the supply will be subject to GST. Accordingly, the full amount of the fee paid by the client to the clinic will be subject to GST and the amount of GST is one-eleventh of that fee.

The massage therapist is supplying services to the clinic. However, the massage therapist is an employee of the clinic. The supply of services as an employee do not come within the meaning of 'enterprise' and are not subject to GST when supplied by the employee to the employer. Accordingly, the wages paid by the clinic to the massage therapist will not be subject to GST.