Edited version of private ruling

Authorisation Number: 1011798492988

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Ruling

Subject: GST and massage services

Question 1

Is the supply of your services GST-free when patients/clients are referred by their General Practitioner for massage therapy and or treatment of lymphoedema?

Answer

No, the supply of your services to patients/clients referred by their General Practitioner for massage therapy and or treatment of lymphoedema is subject to GST, except when Medicare accepts the service in which case the supply of your service is GST-free.

Question 2

Is the supply of the products provided with your service GST-free?

Answer

No, the only products supplied with your service that are GST-free are compression garments unless Medicare accepts your massage service and it is provided from the premises at which the massage service is provided in which case the supply of the products is GST-free.

Relevant facts and circumstances

You have an Australian Business Number and you are registered for the goods and services tax (GST).

You provide massage services for the treatment of lymphoedema.

Your lymphoederna treatment or Complex Lymphatic Therapy and the treatment is not recognised by Medicare except for 5 visits per annum under the Enhanced Primary Care Program.

· your have a Medibank Private Provider Number.

· you are a member of a massage association.

· you have fulfilled the accreditation and continuing professional development requirements to be registered on the National Lymphoedema Practitioners Register.

· Your massage treatment and treatment of lymphoedema are appropriate, as:

o you assess patients/clients

o you plan a course of action to preserve, restore or improve the physical wellbeing as per my training.

o your treatment is appropriate and relevant to the health profession

o your treatment includes further treatments and preventative medicine strategies to maintain results.

You provided the following list of products that you use or provide to patients/clients:

· Bandaging - usually from Hartman or Smith & Nephew

· Compression garments

· Supplements

· Accessories such as

· Various treatments

Reasons for decision

Detailed reasoning

Question 1

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply if: 

(a) you make the supply for consideration;

(b) the supply is made in the course or furtherance of an enterprise that you carry on;

(c) the supply is connected with Australia; and

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

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

You make supplies for consideration, and the supplies are for furtherance of the enterprise you carry on, they are connected with Australia and you are registered for GST.

Therefore, your supplies will be taxable unless they are GST-free or input taxed.

There are no provisions in the GST Act that would make your supplies input taxed.

However, Division 38 of the GST Act makes certain supplies GST-free.

Subsection 38-10(1) of the GST Act provides that a supply of other health services is GST-free if:

(a) it is a service of a kind specified in the table in subsection 38-10(1) of the GST Act or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations),

(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.

All of the above requirements must be satisfied for the supply of your massage services to be GST-free.

To satisfy the requirement in paragraph 38-10(1)(a) of the GST Act, the services you supply must be specified in the table in subsection 38-10(1) (the table) of the GST Act or the GST Regulations. At this stage, no regulations have been made in relation to section 38-10 of the GST Act.

In your case, the service of massage therapy that you provide is not one of the 21 specified health services for the purpose of the GST Act. Therefore, a supply of massage therapy in its own right will not be GST-free.

However, a supply of massage therapy may be GST-free if:

· it is part of a health service that is specified in the table in section 38-10 of the GST Act,

· it is supplied by a recognised professional in one of the listed complementary health services who is also trained in massage therapy,

· the listed complementary health service profession considers the massage to be a standard technique or component treatment for that listed complementary health service, and

· the listed complementary health service profession accepts it as being necessary for the appropriate treatment of the recipient.

In your case, you provide massage therapy or treatment for lymphoedema to your patients/clients who have been referred by General Practitioners. Your supply is made directly to your patients/clients at your business premises and is not made through the General Practitioner. The services are provided by you on referral from a General Practitioner and are not part of the treatment provided by the General Practitioner. Therefore, you are making a separate supply to the supply from the General Practitioner.

As your supplies of massage therapy are not a health service specified under paragraph 38-10(1)(a) of the GST Act, nor are your supplies of massage therapy part of such a health service, the requirements of subsection 38-10(1) of the GST Act are not met. Consequently, your supplies of massage therapy are not GST-free under section 38-10 of the GST Act.

Section 38-7 of the GST Act is of relevance to your service and specifies that:

(1) A supply of a *medical service is GST-free.

(2) However, a supply of a *medical service is not GST-free under subsection (1) if:

(a) it is a supply of a *professional service rendered in prescribed circumstances within the meaning of regulation 14 of the Health Insurance Regulations made under the Health Insurance Act 1973 (other than the prescribed circumstances set out in regulations 14(2)(ea), (f) and (g)); or

(b) it is rendered for cosmetic reasons and is not a *professional service for which Medicare benefit is payable under Part II of the Health Insurance Act 1973.

(3) A supply of goods is GST-free if:

(a) it is made to an individual in the course of supplying to him or her a *medical service the supply of which is GST-free; and

(b) it is made at the premises at which the medical service is supplied.

Asterisk terms are defined under section 195-1 of the GST Act.

Under section 195-1 of the GST Act *medical service is defined as:

medical service means:

(a) a service for which medicare benefit is payable under Part II of the Health Insurance Act 1973; or

(b) 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.

In your case your therapeutic service is not excluded from being GST-free under sections 38-7(1) or (2) of the GST Act.

Guidance on the interpretation of section 38-7(3) of the GST Act is provided by the Health Industry Partnership - issues register 1.a.11 located on the Australian Tax Office website at http:/www.ato.gov.au and states:

This question raises the application of the second limb of the definition of a '*medical service' in section 38-7. The phrase 'on behalf of' in the second limb of the definition of '*medical service' means the performance of a component of the service provided by a practitioner that is not necessarily supervised by that practitioner. An example is where a laboratory technician assists in undertaking pathology testing of specimens.

However, 'on behalf of' does not include a service performed on referral by another person. A service performed on referral by another person, is not a component of the supply being provided by the first practitioner. The service being provided by the second person will be a separate supply, the GST-free status of which must be examined by reference to the supply by that second person.

A referral, in itself, will not render the subsequent supply GST-free. A massage service will be a GST-free *medical service if either: a Medicare benefit is payable; or it is undertaken by a *medical practitioner (as defined in the GST Act) and the practitioner is skilled in the provision of this supply and such treatment is generally accepted by the profession as being appropriate treatment.

You advised us that your therapy services are not recognised by Medicare except for 5 visits per annum under the Enhanced Primary Care Program and that you have a Medibank provider number. In addition you have advised us that you are a member of the professional association Australian Traditional Medicine Society and that you have a provider number.

As discussed above the supplies which are made and recognised by Medicare will be GST-free while the other supplies will be subject to GST under section 9-5 of the GST Act.

Question 2

The supply of your medical products is GST-free if it satisfies the requirements of subsections 38-45(1) and (2) of the GST Act, which specify:

(1) A supply is GST-free if:

(a) it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and

(b) the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.

(2) A supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designed as a spare part for, another thing the supply of which would be GST-free under subsection (1).

(3) However, a supply is not GST-free under subsection (1) or (2) if the supplier and the *recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

Therefore, for the supply of a medical aid or appliance to be GST-free, the supply must meet all the requirements listed in subsection 38-45(1) or subsection 38-45(2) of the GST Act.

Item 3 in the table in Schedule 3 to the GST Act (Item 3) lists surgical stockings and item 71 in the table in Schedule 3 to the GST Act (Item 71) lists pressure management garments and lymphoedema pumps and as a consequence your compression garments satisfy Item 71 and your surgical stockings satisfy Item 3 and are GST-free under section 38-45 of the GST Act.

There are no other items in the table in Schedule 3 which would make your other products be GST-free, consequently your other products are subject to GST under section 9-5 of the GST Act.

However, for the situation where Medicare accepts your massage service and the service is provided from the premises at which the massage service is supplied the supply of your products is GST-free under subsection 38-7(3) (cited above) of the GST Act.

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