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You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation No: 1051233828677

Date of advice: 5 June 2017

Ruling

Subject: Goods and services tax (GST) and a supply of counselling services

Issue 1

Is the supply of counselling services by you to patients in Australia subject to GST?

Answer 1

Where you are registered or required to be registered for GST, your supply of counselling services to patients in Australia will not be subject to GST. Your supply of counselling services will be GST-free under section 38 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Where you are not required to be registered for GST, your supply of counselling services to patients in Australia will be outside the scope of GST. Therefore you will not liable to pay GST for the supply of these services.

Issue 2

Are you required to register for GST?

Answer 2

You are required to be register for GST if your business have GST annual turnover of A$75,000 or more.

Issue 3

Are you required to lodge a business activity statement (BAS)?

Answer 3

If you are registered for GST you need to lodge a BAS. Your BAS will help you to report and pay GST amounts, and claim GST credits for any GST included in the price of any goods and services you buy for your business.

When you register for an Australian business number (ABN) and GST we will automatically send you a BAS when it is time to lodge.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a registered professional counsellor. You are a member of your industry association in Australia.

You are also registered with a Government organisation in relation to these services.

You are currently not registered for GST.

You supply counselling services to individual patients as a standard component of your supply of services. The counselling services are a necessary part of the patient’s treatment.

The individual patients are often referred to you by other professionals.

You receive payment for your supply of your services.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Division 38

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-7

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-10

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the GST Act states:

    You make a taxable supply if:

        (a) you make the supply for *consideration; and

        (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

        (c) the supply is *connected with the indirect tax zone (Australia); and

        (d) you are *registered or *required to be registered.

        (e) However, the supply is not a * taxable supply to the extent that it is *GST-free or *input taxed.

      (*denotes a defined term in section 195-1 of the GST Act)

Your supply of counselling services in Australia will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.

From the facts given, the supply of counselling services by you to the patients in Australia satisfy paragraphs 9-5(a) to 9-5(c) of the GST Act, as follows:

    (a) you make the supply of counselling services in return for consideration by way of payments;

    (b) the supply is made in the course of your business; and

    (c) the counselling services are performed/provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia).

Therefore, we need to consider whether you are required to be registered for GST (paragraph 9-5(d) of the GST Act).

Paragraph 9-5(d)

Are you required to be registered for GST?

The next step is to determine whether you are required to be registered for GST since you currently are not registered for GST.

Under section 23-5 of the GST Act, a supplier is required to be registered for GST if:

    (a) the supplier carries on an enterprise; and

    (b) the supplier’s GST turnover (current and/or projected) meets the GST registration turnover threshold (currently $A75,000 and $A150,000 for non-profit organisation).

Section 188-10 of the GST Act provides that your GST turnover meets the registration turnover threshold if:

    ● your current GST turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is below $75,000; or

    ● your projected GST turnover is at or above $75,000.

The supplier can choose to register for GST if its GST turnover is less than $A75,000.

Goods and Services Tax Ruling GSTR 2001/7 (available at www.ato.gov.au) provides guidance on the meaning of GST turnover.

The current annual turnover is the sum of the values of all supplies made in a particular month plus the previous 11 months. The projected annual turnover is the sum of the value of all supplies made in a particular month plus the next 11 months.

The GST turnover is the gross business income (not the profit). Supplies that are connected with Australia are included when calculating the GST turnover even if these connected supplies are determined to be GST-free.

Accordingly when you calculate your GST turnover you will include all supplies that are connected with Australia (including GST-free supplies). Where your GST annual turnover is $A75,000 or more, you will be required to be registered for GST. You can call us on 13 28 66 to register for GST or register through your tax agent or online.

Where your GST annual turnover is less than $A75,000, you are not required to be registered for GST but can choose to register for GST.

However, if you register for GST your supply will be a taxable supply to the extent that it is not GST-free or input taxed.

Your supply of services is not an input taxed supply under the GST Act.

The next step is to determine whether the supply is GST-free.

GST-free

Subsection 38-7(1) of the GST Act

Under subsection 38-7(1) of the GST Act a supply of a 'medical service’ is GST-free.

A 'medical service' is defined under section 195-1 of the GST Act to mean:

    ● a service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973; or

    ● any other service supplied by or on behalf of a medical practitioner or approved pathology practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

Based on the information provided, you receive a Medicare benefit for your supply of counselling services under MBS item 80150 & 80160 and therefore your supply of counselling services satisfy the definition of a medical service under section 195-1 of the GST Act.

Accordingly you meet the requirements of subsection 38-7(1) of the GST Act and your supply of counselling services to patients in Australia will be GST-free and no GST payable on this supply.

Furthermore, your supply of counselling services also will be GST-free under Subsection 38-10(1) of the GST Act where you do not receive Medicare benefit for your supply of counselling services.

Subsection 38-10(1) of the GST

Subsection 38-10(1) of the GST Act deals with 'other health services' which are GST-free and states as follows.

A supply is GST-free if:

(a) it is a service of a kind specified in the table to subsection 38-10(1) of the GST Act or of a kind specified in the regulations; and

(b) the supplier is a recognised professional in relation to the supply of services of that kind; and

(c) the supply would generally be accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the *recipient of the supply.

The 'other health services' must satisfy all these elements in order to be a GST-free supply.

Paragraph 38-10(1)(a) of the GST Act

The Counselling services is not listed in the table in subsection 38-10(1) of the GST Act or in the GST Regulations. Therefore, the counselling services, in itself, does not satisfy the requirement in paragraph 38-10(1)(a) of the GST Act.

However, the requirement in paragraph 38-10(1)(a) of the GST Act may be satisfied where the supplier is supplying one of the services listed in the table in subsection 38-10(1) of the GST Act and counselling is a standard component or technique of the supply of that listed service.

Psychology' and 'Related Services' are services in the table in subsection 38-10(1) of the GST Act for which counselling may be considered a standard component or technique of the supply.

You are supplying professional counselling services as a standard component or technique of the supply of counselling services.

Professional counselling is a service that is listed in the table in subsection 38-10(1) of the GST Act. Accordingly, the requirement in paragraph 38-10(1)(a) of the GST Act is satisfied.

Paragraph 38-10(1)(b) of the GST Act

For the purposes of paragraph 38-10(1)(b) of the GST Act, a recognised professional must provide the service.

Section 195-1 of the GST Act provides that a person is a recognised professional in relation to a supply of services of a kind specified in subsection 38-10(1) of the GST Act if:

(a) the service is supplied in a State or Territory in which the person has a permission or approval, or is registered, under a *State law or a *Territory law prohibiting the supply of services of that kind without such permission, approval or registration; or

(b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind; or…’

You are supplying professional counselling services. There is no State or Territory law that prohibits a person from supplying these services without permission, approval or registration. Accordingly, in relation to the supply of counselling, a person is a recognised professional if that person is a member of a professional association that has uniform national registration requirements relating to the supply of relevant services.

You are a member of the national association with uniform national registration requirements for the supply of professional counselling services – the Relevant Australian Association. Therefore, you are a recognised professional in relation to the supply of your services and the requirement in paragraph 38-10(1)(b) of the GST Act is satisfied.

Paragraph 38-10(1)(c) of the GST Act

The requirement in paragraph 38-10(1)(c) of the GST Act is that the supply must be generally accepted, in the relevant profession, as being necessary for the appropriate treatment of the recipient of the supply.

As the patient individually engages and pays the counsellor to supply the services, the patient is the recipient of the supply.

It is considered that 'appropriate treatment' will be established where an entity assesses that patient's state of health and determines a process to pursue, in an attempt to preserve, restore or improve the physical or psychological wellbeing of that patient to the extent that their training allows. 'Appropriate treatment' includes the principles of preventative medicine.

Additionally, the phrase 'generally accepted in the profession' indicates that it is the relevant profession that determines what services are generally accepted.

Based on the information provided, the counselling services are conducted by you as a registered professional and are generally accepted in relevant profession as being necessary for the appropriate treatment of the recipient of the supply. Therefore, you meet requirement in paragraph 38-10(1)(c) of the GST Act.

Accordingly you meet all the requirements of subsection 38-10(1) of the GST Act. Therefore, the supply of counselling services by you will be also GST-free where the counselling services are generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient of the supply.