ATO Interpretative Decision

ATO ID 2001/662 (Withdrawn)

Goods and Services Tax

• This ATO ID is withdrawn, as it is no longer necessary. Where a service of herbal medicine is supplied after 30 June 2003, paragraph 38-10(1)(b) of the GST Act will apply and the entity must be a 'recognised professional' as defined in section 195-1 of the GST Act.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a qualified herbalist, making a GST-free supply under subsection 38-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies herbal medicine services before 1 July 2003?

Decision

Yes, the entity is making a GST-free supply under subsection 38-10(1) of the GST Act when it supplies herbal medicine services before 1 July 2003, where the services are generally accepted in the herbal medicine profession as being necessary for the appropriate treatment of the recipient of the supply.

Facts

The entity is a qualified herbalist. The entity supplies a herbal medicine service to a patient before 1 July 2003. The entity does not supply traditional Chinese herbal medicine services to patients.

The entity began practicing herbal medicine before 8 July 1999. The entity is a member of a professional association with uniform national registration requirements in relation to the supply of herbal medicine, and has been a continuous member of this association since 8 July 1999.

There is no State law that requires the entity to have permission or approval, or to be registered to supply its herbal medicine services.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Under subsection 38-10(1) of the GST Act, an entity makes a GST-free supply of health services if:

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it provides a service of a kind specified in the table in subsection 38-10(1) of the GST Act or of a kind specified in the A New Tax System (Goods and Services Tax) Regulations 2019(GST Regulations) (paragraph 38-10(1)(a) of the GST Act); and

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the entity is a recognised professional in relation to the supply of services of that kind (paragraph 38-10(1)(b) of the GST Act); and

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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 (paragraph 38-10(1)(c) of the GST Act).

Herbal medicine (including traditional Chinese herbal medicine) is listed at item 8 in the table in subsection 38-10(1) of the GST Act. Therefore, the requirement in paragraph 38-10(1)(a) of the GST Act is satisfied.

For the purposes of paragraph 38-10(1)(b) of the GST Act, the entity supplying the service must be a recognised professional. However, pursuant to section 21 of the A New Tax System (Goods and Services Tax Transition) Act 1999 (Transition Act):

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paragraph 38-10(1)(b) of the GST Act does not apply in relation to a supply of herbal medicine (including traditional Chinese herbal medicine) if the service is performed before 1 July 2003; and

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the supply of herbal medicine performed before 1 July 2003 is not GST-free if the supplier does not meet the requirements (if any) set out in the A New Tax System (Goods and Services Tax Transition) Regulations 2000 (Transition Regulations) made for the purposes of subsection 21(2) of the Transition Act.

Therefore, to be a GST-free supply, the supplier of the service must meet the requirements set out in any regulation made for the purposes of subsection 21(2) of the Transition Act. Regulation 7 of the Transition Regulations sets out these requirements.

Subregulation 7(2) of the Transition Regulations requires that a supplier of acupuncture, herbal medicine or naturopathy must have permission or approval, or to be registered to perform that service if the law of the State or Territory in which the service is performed requires that person to have permission, approval or registration.

Subregulation 7(3) of the Transition Regulations provides that if subregulation 7(2) does not apply, the supplier must meet the requirements of subregulation (4) or (5).

Given that there is no State law that requires the entity to have permission or approval, or to be registered to supply its herbal medicine services, subregulation 7(4) of the Transition Regulations is relevant to the entity's circumstances.

Subregulation 7(4) of the Transition Regulations requires that if the entity that is supplying the service commenced practising in the relevant discipline on or before 8 July 1999, the entity must:

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have been a member of a national professional association of practitioners in the discipline on 8 July 1999 and be a member of an association of that kind when the service is performed; or

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before the service is performed:

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have satisfied the requirements for the award of a diploma, advanced diploma or degree in the discipline by completing an accredited course of study; or

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have an overseas qualification in the discipline that is assessed by the relevant assessing authority for the discipline as being the equivalent of a diploma, advanced diploma or degree in the discipline.

The entity was a member of a national professional association of practitioners in the discipline on 8 July 1999 and is still a member of that association. Therefore, the entity meets the requirements of subregulation 7(4) of the Transition Regulations.

The third requirement in subsection 38-10(1) 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.

It is considered that 'appropriate treatment' will be established where an entity assesses the recipient'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 recipient 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.

Therefore, where the entity supplies a service of herbal medicine and assesses the recipient's state of health and determines a process to pursue to preserve, restore or improve the physical or psychological wellbeing of the recipient and the herbal medicine profession generally accepts this treatment as appropriate, the requirements in paragraph 38-10(1)(c) of the GST Act will also be met.

The entity meets the requirements in paragraph 38-10(1)(a) of the GST Act and subregulation 7(4) of the Transition Regulations. Therefore, the service provided by the entity is GST-free where the service is generally accepted in the herbal medicine profession as being necessary for the appropriate treatment of the recipient of the supply.

Amendment History

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   subsection 38-10(1)
   paragraph 38-10(1)(a)
   paragraph 38-10(1)(b)
   paragraph 38-10(1)(c)
   section 195-1

Other References:
Health Issues Register

Keywords
Goods & services tax
GST free
GST health
Section 38-10 - other health services
GST transitional issues
Special transitional rules

Siebel/TDMS Reference Number:  1-NGPOVIM

Business Line:  Indirect Tax

Date of publication:  30 November 2001

ISSN: 1445-2782