Edited version of private ruling

Authorisation Number: 1011651411172

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Ruling

Subject: GST and supply of osteopathy services

Question 1

Is your supply of your health services to patients referred by doctors or other patients of the clinic GST-free?

Answer

Yes

Relevant facts and circumstances

You are a health service provider who is registered for goods and services tax (GST).

You state the following:

· you are a recognised professional in that you are registered under the State Board of Health of Australia as the provider of health services and you are a member of the Health Association

· you are registered with Medicare

· you supply your health services at the clinic

· you consider that all of the services you provide would generally be accepted by the osteopath profession as being necessary for the appropriate treatment of the patient in their circumstances, and

· you have a written agreement (agreement) with the clinic.

You decide the appropriate treatment for the patient.

You are legally responsible for any treatment that you provide to patients.

Tax invoices are provided under the letter head of the clinic. An example of a tax Invoice has the following details:

· patient name

· medical practitioner's name

· provider number

· description of service provided

· total paid, and

· balance due

The clinic provides you with the recipient created Invoice as per the agreement. An example of a recipient created invoice has the following details:

· recipient created invoice

· issued to you.

· seminar fee

· retained amount @ set %

· total paid, and

· this invoice does not include GST

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-10(1)

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

A New Tax System (Goods and Services Tax) Act 1999 Section 11-5

Reasons for decision

Summary

Your supply of health services to patients referred by doctors or other patients of the clinic is GST-free?

Detailed reasoning

Subsection 38-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

A supply is GST-free if:

(a) it is a service of a kind specified in the table in this subsection, 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.

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

All of the elements in subsection 38-10(1) of the GST Act must be satisfied in order for a supply of a health service to be GST-free.

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

For the purposes of paragraph 38-10(1)(a) of the GST Act, the services must be of a kind specified in the table in subsection 38-10(1) of the GST Act.

Accordingly your allied health services is listed in the table in subsection 38-10(1) of the GST Act.

As such, the first requirement in paragraph 38-10(1)(a) of the GST Act is satisfied.

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

For the purpose 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 the definition of a recognised professional. It provides that a person is a recognised professional, in relation to the supply of a service of a kind specified in the table in subsection 38-10(1) of the GST Act if:

· 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

· 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 asocial that has uniform national registration requirements relating to the supply of services of that kind, or

· in the case of services covered by item 3 in the table - the service is supplied by an accredited service provider with the meaning of section 4 of the Hearing Services Administration Act 1997.

You advised that, in your case you provide allied health services and that you are registered under a state in Australia.

You, therefore, satisfy section 195-1 of the GST Act and accordingly you are a recognised professional under paragraph 38-10(1)(b) of the GST Act.

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

Whether the requirements in paragraph 38-10(1)(c) of the GST Act are satisfied, will be a question of fact to be determined by reference to the service being supplied. However, it is noted that the GST Act requires that the services that you provide be necessary for the appropriate treatment of the recipient of the supply.

The term 'appropriate treatment' is not defined in the GST Act. It is considered that 'appropriate treatment' will be established where the recognised professional (you are a registered allied health professional) assesses the recipient's state of health and determines a process or course of treatment, in an attempt to preserve, restore or improve the physical wellbeing of that recipient insofar as that recognised professional's particular area of training allows. This may include subsequent supplies of the process or course of treatment. 'Appropriate treatment' also includes the principles of preventative medicine.

The term 'generally accepted' is also not defined in the GST Act. However, it is considered that a particular service being provided by the relevant professional and the circumstances in which the service is provided must generally be accepted by the relevant profession as being necessary. The words 'generally accepted' indicate that it will ultimately be the relevant profession that determines what services will be generally accepted.

You have advised that you consider that all of the services you provide would generally be accepted by the allied health profession as being necessary for the appropriate treatment of the patient in their circumstances. However, to fully satisfy the third requirement of subsection 38-10(1) of the GST Act, the service you provide must be for the 'appropriate treatment of the recipient of the supply'.

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 the supply of your allied health services for example, you and the patient, the recipient of the supply of your allied health services is your patient.

Furthermore, your written agreement with the clinic requires the clinic to supply you with infrastructure and administrative support services for which you are charged a fee. The agreement does not indicate that you are required to provide your medical services to the clinic.

You, therefore, supply your allied health services using the infrastructure and support services of the clinic to patients and not to the clinic.

You, therefore, satisfy paragraph 38-10(1)(c) of the GST Act and accordingly your supply of health services to patients will be GST-free as you satisfy all of the requirements of subsection 38-10(1) of the GST Act.

Entitlement to GST credits

You are entitled to GST credits for your creditable acquisitions under Division 11 of the GST Act.

Section 11-5 of the GST Act provides the meaning of creditable acquisition. It provides that you make a creditable acquisition if:

· you acquire anything solely or partly for a creditable purpose

· the supply of the thing to you is a taxable supply

· you provide, or liable to provide, consideration for the supply, and

· you are registered or required to be registered for GST.

In your case, provided you satisfy all the conditions of a creditable acquisition under section 11-5 of the GST Act, you are entitled to GST credits on the consideration that you provide to the clinic for using the infrastructure and support services of the clinic. However, you must hold a valid tax invoice issued to you by the clinic at the time of your claiming the GST credits. Furthermore, the recipient created Invoice issued by the clinic is not a valid tax invoice.

Further information on this subject is available in the Australian Taxation Office publication GST for small business which you can access via the Australian Taxation Office website.

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