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Supply of services through a third party

Last updated 17 August 2023

Some supplies through third parties can also qualify for GST-free treatment.

Medical and other health services are sometimes provided under multi-party arrangements, where the service for a patient is organised and paid for by a third party.

If the service is GST-free when provided to the patient, it is also GST-free when you are contracting with:

  • an insurer
  • an operator of a statutory compensation scheme
  • a compulsory third party scheme (scheme operator)
  • an Australian Government agency.

The supplier and the recipient (the insurer, scheme operator, or Australian Government agency) can agree not to treat the supplies as GST-free. This may be easier for the parties where they have a combination of taxable and GST-free supplies.

Medical and other health services supplied to any other third party are not GST-free.

Where a supply is not made to a third party (for example the third party is paying the medical practitioner on behalf of the patient), the supply is GST-free if it falls under the definition of a medical or other health service.

Example: service provided via an insurer

ABC Health Fund has an agreement with a physiotherapist, Phil's Physio, for services supplied to settle claims made under their health insurance policies. The agreement outlines what both parties need to do when Phil's Physio treats an ABC health fund member. It also outlines that ABC Health Fund must pay Phil's Physio for their services to the private health fund member, and the authorisation required for such payments. ABC and Phil's Physio haven't agreed to treat the supplies as not being GST-free.

Peter has private health insurance with ABC Health Fund. Peter has an injury that requires physiotherapy. He contacts ABC Health Fund who refer him to Phil's Physio.

Under this arrangement, the payment to Phil's Physio is for the supply made to ABC Health Fund of providing the services to Peter.

If Phil's Physio supplied the service to Peter directly it would be GST-free.

The supply by Phil's Physio to ABC Health Fund is GST-free because:

  • it is made to an insurer when settling a claim made under an insurance policy
  • Phil's Physio provides a service (physiotherapy) that is supplied to an individual (Peter)
  • the physiotherapy service would be GST-free if it was supplied to Peter directly.
End of example


Example: service provided via an Australian Government agency

The State Sports Institute, an Australian Government agency, contracts a health services provider, Workplace Wellness, to vaccinate its staff against influenza. The State Sports Institute and Workplace Wellness haven't agreed to treat the supplies as not being GST-free.

Workplace Wellness supplies would be GST-free if they were supplied to staff members directly rather than under the State Sports Institute contract.

The supply by Workplace Wellness to State Sports Institute is GST-free because:

  • it is made to an Australian Government agency
  • the service is to provide supplies (vaccinations) to individuals (staff of State Sports Institute).

The vaccinations supplied to staff fall under the definition of a medical service and are therefore GST-free.

End of example