Edited version of private ruling

Authorisation Number: 1011555754341

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Ruling

Subject: GST and services provided by a health professional

Issue 1 Question 1

Whether your supply of services to a medical practitioner is GST-free under section 38-10 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where you and the medical practitioner have entered into an agreement which requires you to provide nursing services to the medical practitioner's patients under an incentive program?

Answer

No, your supply of services to the medical practitioner is not GST-free under section 38-10 of the GST Act.

Issue 2 Question 1

Whether payments you receive from a relevant Australian authority for services provided to individual patients are to be included in the calculation of your current or projected GST turnover for GST registration?

Answer

Yes, you should include the payments from the relevant Australian authority in the calculation of your current or projected GST turnover for GST registration.

Relevant facts

You are registered for goods and services tax.

You carry on an enterprise of supplying nursing services. The nursing services are provided by an individual who is a registered and credentialed nurse.

You have an agreement/arrangement with a medical practitioner to provide your nursing services to the medical practitioner's patients under an incentive program. You have provided details of the relevant program.

Payments under this initiative are made by a relevant Australian authority to the medical practices in which the mental health nurse is engaged.

The medical practitioner then pays you a negotiated amount.

Reasons for decision

Question 1

Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make.

A supply of services is a taxable supply if all the requirements of section 9-5 of the GST Act are met. The requirements under section 9-5 of the GST Act are:

(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 Australia; and

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

However, a supply that is GST-free or input taxed is not a taxable supply.

Division 38 of the GST Act specifies the types of supplies that are GST-free. Of relevance to your circumstances is subsection 38-10(1) of the GST Act, which provides that the supply of other health services is GST-free if it is:

· a listed health service

· performed by a recognised professional, and

· generally accepted in the relevant health profession as being necessary for the appropriate treatment of the recipient of the supply.

Nursing is a listed health service and you are a recognised professional in relation to the supply of nursing services. It is left to determine whether your supply of nursing services would be generally accepted as being necessary as the appropriate treatment for the recipient of the supply.

A health practitioner provides appropriate treatment when they assess a patient's health and determine a course of action to preserve, restore, or improve the physical or psychological wellbeing of that patient as far as their training allows.

The treatment is appropriate if it would generally be accepted by the relevant health profession as being appropriate for the patient.

Section 195-1 of the GST Act defines 'recipient' in relation to a supply to mean 'the entity to which the supply was made'. Where there are only two parties to an arrangement, for example, you as the supplier of nursing and the client receiving that treatment, the recipient of the supply is the client receiving the treatment. However, where there is a third party involved who is paying for your services (for example, the medical practitioner), that third party may be the recipient of a supply by you, depending on the contractual relationship in place.

Goods and Services Tax Ruling GSTR 2006/9 provides guidance on GST and supplies by using a number of propositions. Proposition 13 states that when A has an agreement with B for B to provide a supply to C, there is a supply made by B to A (contractual flow) that B provides to C (actual flow).

Paragraphs 155 to 160 of GSTR 2006/9 state:

155. Under the GST health provisions in Subdivision 38-B (except for sections 38-45 and 38-47 dealing with particular supplies of goods and section 38-55 dealing with private health insurance and ambulance insurance), the supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. This outcome results from the specific wording in some health provisions, whilst in other provisions it is due to the nature of the services themselves. This means that a GST-free supply of a health service cannot be made to a business entity or a non-profit body

Example 4: ambulance services supplied to hospital

157. A, a supplier of ambulance services, enters into an agreement with B, a hospital, under which A agrees to provide ambulance services as and when B requests them and B agrees to pay for the services. The obligations under the agreement between A and B are binding.

158. Pursuant to the agreement, A transfers C, a patient, from hospital B to another hospital. The transfer of C is in the course of C's treatment and B pays A to provide A's services to C.

159. The recipient of A's supply of ambulance services is hospital B. A's supply is made to B and provided to C.

160. One of the requirements under subsection 38-10(5) for a supply of an ambulance service to be GST-free is that the service is supplied in the course of treating the recipient of the supply. As hospital B is the recipient of the supply, not the patient, and there is no treatment of the hospital, the supply of the ambulance service is not GST-free.

In this case, the facts indicate that you are engaged by a medical practitioner to provide nursing services to the patients of the medical practitioner. You are paid a negotiated amount by the medical practitioner. You make nursing supplies to patients of the medical practitioner but your supply to the medical practitioner is one of professional services. As the medical practitioner is not the recipient of your nursing services, your supply to the medical practitioner is not GST-free under section 38-10 of the GST Act.

There is nothing in the GST Act which would make your supply of nursing services input taxed.

As your supply of professional services to the medical practitioner satisfies all the requirements of section 9-5 of the GST Act your supply is a taxable supply and therefore subject to GST.

Question 2

Division 188 of the GST Act defines GST turnover. GST turnover is defined by reference to current GST turnover and projected GST turnover.

Your current GST turnover is the GST exclusive value of all the supplies you make or likely to make in the current month plus all the supplies you made in the previous 11 months.

Your projected GST turnover is the GST exclusive value of all the supplies made in the current month plus all the supplies you are likely to make in the next 11 months.

If your projected GST turnover meets or exceeds the turnover threshold then you are required to register for GST even if your current GST turnover is below the threshold.

When calculating your current and projected GST turnover you must disregard any supplies that are:

· input taxed, such as sale or lease of residential premises; or

· not for consideration (unless to an associate); or

· not made in connection with the business that you carry on (e.g. supplies made in a private capacity); or

· not connected to Australia.

Goods and Services Tax Ruling GSTR 2001/7 'meaning of GST turnover, including the effect of section 188-25 on projected GST turnover' provides guidance to the relevance of annual and projected GST turnover to an enterprise.

Paragraph 15 of GSTR 2001/7 states:

The term 'supplies' in section 188-15 and 188-20 refers to all supplies as defined in section 9-10 and is not limited to taxable supplies in section 9-5. For example you may be required to be registered even though all your supplies are GST-free. Current GST turnover and projected GST turnover are the sum of the respective values (excluding GST) for the 12 months.

Therefore, in calculating your GST turnover (either current or project), you need to include both taxable and GST-free supplies of services performed in Australia.

Hence, payments you received from the relevant Australian authority for services (either taxable or GST-free) you provide to patients should be included in the calculation of your current or projected GST turnover for GST registration.

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