1.a.3. Is a medical examination of a patient for the purpose of determining the fitness of that patient to undertake an activity such as flying or diving taxable? In this case the patient has not decided whether or not to undertake the activity - the outcome of the medical examination will be used by the patient to determine whether to pursue the activity further or not. The patient pays for the examination (that is no Medicare rebate is paid).

For source of ATO view, refer to:

• issue 1.a of this issues register
• paragraph 155 in part 3 of GSTR 2006/9 – Goods and services tax: supplies.

If no Medicare benefit is payable, the first limb of the definition of ‘medical service’ in section 38-7 will not apply. Therefore it will only be GST-free if the second limb of the definition applies, that is, if it would be generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

Therefore where a patient initiates a medical examination to determine whether their physical fitness is at a level safe enough for them to participate in an activity, the examination will be GST-free if generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

In contrast, if a medical examination is undertaken as a requirement of a regulatory authority or state or federal law, the examination as well as any subsequent report will be a taxable supply. In this situation, the medical examination is not considered to constitute appropriate treatment for the recipient of the supply.