2.a.10. Where an entity (company, trust or partnership) provides massage therapy services and the individual massage therapists who are subcontracted to that entity are not registered or required to registered for GST, does the practice have to charge GST on services provided by the massage therapists?
For source of ATO view, refer to:
- Part 3 of GSTR 2006/9 – Goods and services tax: supplies
- Issue 2.a and Issue 2.a.11 of this issues register
This question examines supplies made by an entity where the supply would not be subject to GST if supplied by the individual massage therapist because the individual is not registered, or required to be registered, for GST. Whilst this question is in relation to massage therapists, it is relevant to all supplies by an entity where section 38-10 is to be considered.
Where the elements of section 9-5 are satisfied (it is assumed for the purposes of this question that they are) and the supply is not GST-free or input taxed, the supply will be a taxable supply.
In considering the question it is necessary to identify the relevant supply.
In this question there are two supplies:
- a supply by the entity to the patient
- a supply by the individual massage therapist to the entity.
In relation to the first supply:
In many cases, the entity itself will not be able to satisfy the requirements of section 38-10(1)(b) to be a recognised professional.
For the purposes of the application of section 38-10(1)(b), it is considered that the focus is not whether the entity itself is a recognised professional. It is considered that the relevant issue to be determined is whether the performer of the service is a recognised professional in respect of one of the listed services (see Issue 2.a.11) or, where the performer is not the relevant recognised professional, the performer is directly supervised by the relevant recognised professional (see Issue 2 - Meaning of ‘the supplier is a recognised professional’ and Issue 2.a.8). It is also necessary that the supply is of one of those listed services and that the supply is generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient of the supply (refer to discussion under Issue 2 and as to whether massage therapy is GST-free to answer atIssue 2.a.9). Where all the necessary requirements of s38-10 are satisfied, the supply by the entity will be GST-free.
If these requirements are not satisfied, the supply by the entity will not be GST-free.
In relation to the second supply, it will not be GST-free. However if the therapist is not registered or required to be registered the supply will not be a taxable supply.