ATO Interpretative Decision
ATO ID 2001/389 (Withdrawn)
Goods and Services Tax
GST and goods supplied during a GST-free health serviceFOI status: may be released
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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a supplier of health services, making a GST-free supply under subsection 38-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies books and audio tapes to a patient during a GST-free health service?
Decision
No, the entity is not making a GST-free supply under subsection 38-10(3) of the GST Act when it supplies books and audio tapes to a patient during a GST-free health service. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of health services. The entity is supplying a health service that is GST-free under subsection 38-10(1) of the GST Act.
During the GST-free health service, the entity also supplies a patient with books and audio tapes to be taken away and used at home without the supervision of the entity. These books and audio tapes are supplied to assist the patient in managing or recovering from their illness or disability.
The books and audio tapes provide general information about methods and strategies, which may be utilised by the patient in assisting with the treatment or management of their illness or disability.
They are not GST-free medical aids or appliances under subsection 38-45(1) of the GST Act.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Subsection 38-10(3) of the GST Act provides that a supply of goods is GST-free if:
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- it is made to a person in the course of supplying to that person a service which is GST-free under subsection 38-10(1) of the GST Act; and
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- it is made at the premises at which the service is supplied.
In this case, the books and audio tapes are supplied during a consultation for the provision of GST-free health services. The question at issue is whether the booklets and audio tapes are supplied in the course of supplying the GST-free health services.
It is considered that the phrase 'in the course of supplying to that person a service', in the context of subsection 38-10(3) of the GST Act, requires the goods to be supplied at the same point in time at which the GST-free health services are supplied. In addition, the goods must be:
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- customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free health service; or
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- necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.
In this case, the booklets and audio tapes are supplied at the same point in time at which the GST-free health services are supplied. Therefore, it must be determined whether the booklets and audio tapes are either customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free health service; or necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.
The booklets and audio tapes are designed as an aid for people with particular health problems. They are not individually customised to treat the illness or disability of that particular patient exclusively.
The booklets and audio tapes are given to the patient during the consultation to take away and use at home over a period of time. Although they may be useful as part of the patient's overall treatment, they are not used as an integral part of the patient's treatment and are not required immediately during that specific consultation.
This means that the supply of the books and audio tapes is considered to be not made 'in the course of supplying' a GST-free health service.
Therefore, as the supply of the books and audio tapes are not made 'in the course of supplying' the GST-free health service, they do not satisfy the requirements in subsection 38-10(3) of the GST Act. As such, the entity is not making a GST-free supply under subsection 38-10(3) of the GST Act, when it supplies books and audio tapes.
As the entity is registered for GST and the supply satisfies the positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the supply is a taxable supply under section 9-5 of the GST Act.
Date of decision: 29 September 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
subsection 38-10(1)
subsection 38-10(3)
subsection 38-45(1)
Division 40
ATO ID 2001/390
Keywords
Goods & services tax
GST free
GST health
ISSN: 1445-2782
| Date: | Version: | |
| 29 September 2001 | Original statement | |
| You are here | 15 June 2007 | Archived |