Edited version of private ruling

Authorisation Number: 1011793471150

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Ruling

Subject: GST and the supply of dietetic services

Question 1

Are you making a GST-free supply when you make a supply of your services to your clients at your private practice?

Answer

Yes, you are making a GST-free supply when you make a supply of your services to your clients at your private practice.

Question 2

Are you making a taxable supply when you make a supply of your services to a medical practice?

Answer

Yes, you are making a taxable supply when you make a supply of your services to a medical practice.

Relevant facts

You own and operate a nutrition consultancy business. You are registered for the goods and services tax (GST).

You provide your services to your clients on a one to one basis at your private consulting rooms and you are treating these services as GST-free.

You also provide a professional nutrition consultancy service to a medical practice pursuant to an oral agreement that you have with them. Under the agreement, you provide your services for a specified number of hours per week. Your services include assessing patients' diets, educating them and managing their nutrition. All the patients belong to the medical practice. You also undertake non-clinical work including administrative duties, attending clinical meetings and developing resources such as handouts. You charge an hourly rate for the time that you spend at the practice and issue monthly invoices. Currently, you include GST in your charges.

You have advised that the services you supply are generally accepted in the dietetics profession as being appropriate for the patients that you provide your services to.

You are a member of the Dietitians Association of Australia (DAA).

The DAA:

· is the peak body and national association of dietitians and nutritionists. It has branches in each State and Territory. It represents about 4,500 members and all of them practice dietetics;

· provides its members with strategic leadership in food and nutrition through empowerment, advocacy, education, accreditation and communication;

· has its own admittance requirements and acceptable qualifications. Members are required to have university qualifications;

· requires its members to maintain their professional skills through continuing professional development and expects members to attend a minimum of 30 hours. Members must keep a log of their attendance;

· sets standards of practice and has a code of conduct for members to comply. Sanctions will be imposed on members who do not comply;

· provides a range of publications to keep members informed about the profession and current issues in dietetics and nutrition. These include the Nutrition & Dietetics Journal, website, newsletters, e-newsletters, conference proceedings, handbooks, manuals and pamphlets.

You have been granted the status of Accredited Practising Dietitian (APD) by the DAA. You provided a copy of the relevant certificate.

APDs have the qualifications and skills to provide expert nutrition and dietary advice to both groups and individuals. They are required to have sound university qualifications, undertake ongoing training and education and comply with the DAA's guidelines for best practice as well as professional standards.

APDs are trained to assess an individual's diet in order to help treat a wide range of conditions including diabetes, heart disease, cancers, gastrointestinal diseases, food allergies, food intolerances as well as overweight and obesity. They develop personalised eating plans, undertake nutrition and food research, train health care professionals and develop nutrition communications, programs and policies.

APD is the only national credential recognised by the Australian government, Medicare, Department of Veterans Affairs and most private health funds as the quality standard for nutrition and dietetics services in Australia.

Reasons for decisions

Question 1

Under subsection 38-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a supply of other health services is GST-free if:

· 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 regulations

· the supplier is a recognised professional in relation to the supply of services of that kind, and

· 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.

These three elements will be discussed in turn, in light of the facts in your case.

Listed health service

'Dietary' is a service that is specified at item 7 in the table in subsection 38-10(1) of the GST Act.

You provide nutrition and dietary advice which involves assessing patients' diets and educating them on managing their nutrition. Your supply of this service falls within the definition of dietary. Accordingly, your supply satisfies the first element in subsection 38-10(1) of the GST Act.

Recognised professional

The second element in subsection 38-10(1) of the GST Act which must be satisfied in order for a supply to be GST-free, is that the supplier is a recognised professional in relation to the supply of services of that kind. The phrase 'recognised professional' is defined in section 195-1 of the GST Act. It states:

Recognised professional: 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), if:

(a) the service is supplied in a State or Territory in which the person has 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 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

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

Of relevance to your circumstances is paragraph (b) above.

You are a member of the DAA which is a national peak body for dietitians and nutritionists. You are also accredited as an APD with the DAA. From the information that you have provided, it is accepted that the DAA is a professional association that has uniform national registration requirements.

As such, you are a recognised professional as per paragraph (b) of the definition in section 195-1 of the GST Act and your supply satisfies the second element in subsection 38-10(1) of the GST Act.

Generally accepted as being necessary for the appropriate treatment of the recipient of the supply

Issue 2.a of the Health Industry Partnership Issues Register explains that for the purposes of subsection 38-10(1) of the GST Act, 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 that patient. Appropriate treatment includes further treatments and the principles of preventative medicine.

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 two parties to an arrangement, for example, you as the supplier of dietary/ nutrition services and the patient, the recipient of the supply is the patient receiving the treatment.

The information that you have provided regarding the services that you supply indicates that they would fall within the above description of appropriate treatment. Further, you have advised that your services are generally accepted in the dietetics profession as being appropriate for the patients. We confirm that when you supply your services to patients at your private practice, it is the patients who are the recipients of your supply. As such, the third element in subsection 38-10(1) of the GST Act is also satisfied.

As all the elements in subsection 38-10(1) of the GST Act are satisfied, you are making a GST-free supply of dietetic services to your patients at your private practice.

Question 2

In your case, we confirm that the first and second elements in subsection 38-10(1) of the GST Act, as discussed in Question 1 above, are satisfied in all circumstances.

However, as far as the third element in subsection 38-10(1) of the GST Act is concerned, where there is a third party involved who is paying for your services (for example, the medical practice in this case), that third party may be the recipient of a supply by you, depending on the contractual relationship in place.

Generally speaking, you are supplying services to a third party if they engage you to provide the service for them or to a patient under a binding agreement. In these cases, the third party paying for the service is the recipient of the service even though the patient receives the treatment. The service supplied to the third party is not GST-free and will be taxable where the requirements of section 9-5 of the GST Act are met.

Section 9-5 of the GST Act provides that you make a taxable supply if:

· you make the supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

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

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

As explained above, supplies that you make to third parties who are not the recipients of treatment will not be supplies of GST-free health services. The agreement that you enter into with a third party is the starting point when working out who is the supplier and who is the recipient of that supply.

Goods and Services Tax Ruling GSTR 2006/9 provides guidance on the concept of supply. In relation to health services, it states, at paragraph 155:

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.

GSTR 2006/9 also provides a number of examples to illustrate the concept of supply. Of relevance to your circumstances is example 5 in paragraphs 161 to 164:

Example 5: occupational therapist

161. A, an occupational therapist, is engaged by B, a company, to assess the needs of C, its employee. C suffers from multiple sclerosis and needs to use a wheelchair. A and B enter into an agreement which requires A to undertake an assessment of C's condition, to give recommendations in a report to B and for B to pay for the service.

162. A's supply of services is made to B. Although C may benefit from these services, it is B who contracts for the supply of these services and is the recipient of the supply.



163. This supply is not GST-free under subsection 38-10(1). This is because paragraph 38-10(1)(c) requires the supply to be generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient of the supply. B is the recipient of the supply. The supply is not for the treatment of B. Paragraph 38-10(1)(c) is not satisfied.

164. If C engages the occupational therapist to supply its services and B merely pays the therapist on behalf of C, the recipient of the occupational therapist's services is C. This supply will be GST-free if all of the requirements of subsection 38-10(1) are satisfied.

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