ATO Interpretative Decision

ATO ID 2002/527

Goods and Services Tax

GST and homeopathy
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 homeopath, making a GST-free supply under Subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies homeopathic services?

Decision

No, the entity is not making a GST-free supply under Subdivision 38-B of the GST Act when it supplies homeopathic services. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a homeopath. The entity supplies homeopathic services.

The entity is registered as a homeopath with the Australian Therapeutic Medicine Society and holds a diploma in homeopathy.

The entity is not supplying one of the services 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 1999 (GST Regulations).

The entity is not a medical practitioner or an approved pathology practitioner. The entity does not supply its services on behalf of a medical practitioner or an approved pathology practitioner

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

Under Subdivision 38-B of the GST Act, certain health services are GST-free. In particular, section 38-7 of the GST Act (the supply of medical services) and section 38-10 of the GST Act (the supply of other health services).

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.

There is no medicare benefit payable under Part II of the Health Insurance Act 1973 for the supply of homeopathic services. Accordingly, for the supply of homeopathic services to be GST-free, it must satisfy the second limb of the definition of 'medical service'. Part of that definition requires that the service be supplied by or on behalf of a medical practitioner or approved pathology practitioner.

The terms 'medical practitioner' and 'approved pathology practitioner' are separately defined under section 195-1 of the GST Act to mean a person who is a medical practitioner or an approved pathology practitioner for the purposes of the Health Insurance Act 1973.

The entity is not a medical practitioner or an approved pathology practitioner. Furthermore, the entity does not supply its services on behalf of a medical practitioner or an approved pathology practitioner. Therefore, the homeopathic services supplied by the entity are not GST-free medical services under subsection 38-7(1) of the GST Act.

Under subsection 38-10(1) of the GST Act, a supply of a health service is GST-free where:

•
it is 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 GST Regulations;
•
the supplier is a recognised professional in relation to the supply of services of that kind; and
•
the supply would be generally accepted in the profession associated with supplying services of that kind as being necessary for the appropriate treatment of the recipient of the supply.

Homeopathy is not a service specified in the table in subsection 38-10(1) of the GST Act nor is it specified in the GST Regulations.

The entity is a registered homeopath providing homeopathic services. The entity is not supplying one of the services specified in the table in subsection 38-10(1) of the GST Act, or of a kind specified in the GST Regulations. Therefore, the entity is not making a GST-free supply under subsection 38-10(1) of the GST Act.

Accordingly, the entity is not making a GST-free supply of a medical service or any other health service under Subdivision 38-B of the GST Act when it supplies homeopathic services.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provisions in Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies homeopathic services.

[Note 1: Homeopathy may be considered to be a technique of one or more of the services that are specified in the table in subsection 38-10(1) of the GST Act. Accordingly, where homeopathy is a technique of one of the services that are listed in the table, is supplied by a recognised professional in relation to that listed service and generally accepted within that profession as being necessary for the appropriate treatment of the recipient of the supply, then the supply of such services will be GST-free.
Note 2: Under section 21 of the A New Tax System (Goods and Services Tax Transition) Act 1999, the supplier of a service of acupuncture, naturopathy or herbal medicine is not required to meet the requirements for being a 'recognised professional' if the service is performed before 1 July 2003. However, the service must meet the requirements set out in Regulation 7 of the A New Tax System (Goods and Services Tax Transition) Regulations 2000.]

Date of decision:  16 November 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   subsection 38-10(1)
   Division 40

A New Tax System (Goods and Services Tax) Regulations 1999
   1

A New Tax System (Goods and Services Tax Transition) Act 1999
   section 21

A New Tax System (Goods and Services Tax Transition) Regulations 2000
   Regulation 7

Related ATO Interpretative Decisions
ATO ID 2002/526

Other References:
Stedman's Medical Dictionary, 2000, 27th edn, Lippincott Williams & Williams, Baltimore.

Keywords
Goods & services tax
GST health
Section 38-10 - other health services
GST supplies & acquisitions
Taxable supply

Business Line:  GST

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
You are here 16 November 2001 Original statement
  22 June 2007 Archived

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