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Edited version of your private ruling
Authorisation Number: 1012432075655
Ruling
Subject: GST and other health services
Question
Are the payments by Entity A to You payments in respect of taxable supplies made by you to Entity A and subject to goods and services tax (GST)?
Answer
Yes.
Relevant facts and circumstances
· You are an individual and registered for GST.
· You are the owner of the business providing other health services.
· You are a recognised health professional and also employ another health professional to provide other health services.
· You provide other health services to patients.
· You provide other health services to children and you invoice the parents for your services and the invoices are paid by the parents.
· You also provide other health services to a number of patients identified by Entity A and Entity A pays for your services for these patients.
· You invoice Entity A for your services supplied to the patients identified by Entity A.
· You would not provide any health services to these patients if Entity A did not arrange for you to provide the services to these patients.
· You have a verbal agreement with Entity A to provide the health services to those patients.
· These patients are not liable to pay you for the health services provided by you.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 38-10
Section 9-5
Reasons for decision
Section 9-5 A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if:
· you make the supply for consideration
· the supply is made in the course of 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 the supply is GST-free or input taxed.
In your case the services you provide are for consideration, they are in the course of your enterprise in Australia and you are registered for GST. Therefore, the supplies you make will be taxable unless they are either GST-free or input taxed. There is no provision in the GST Act or any other Act that would make your supplies input taxed.
Accordingly, what is left to be determined is whether the supply of your services is GST-free.
Subsection 38-10(1) of the GST Act allows for certain health services to be GST-free. This subsection provides that a supply is GST-free if:
(a) it is a service of a kind specified in the table in this subsection, or a kind specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (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.
You provide health services and your services are listed in the table in subsection 38-10(1) of the GST Act.
You have advised that you and your employee are recognised health professionals. Therefore you meet the first two requirements listed above. The third requirement is that the supply is generally accepted, in the profession, as being necessary for the appropriate treatment of the recipient of the supply.
Section 195 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 services, for example, you and your patient, the recipient of the supply of your health services is your patient.
However, where there is a third party involved in the transaction, there may be one or more supplies for GST purposes. Therefore, it is necessary to determine what is being supplied to whom.
The recipient of a supply is the entity to which the supply is made. In some circumstances the 'recipient of the supply' may not be the patient, but instead be a third party (for example a hospital or similar) who has arranged for the supply.
Supplies will be subject to GST where the supplier has been contracted by third parties (whether in writing or verbally) to provide the supply to other people.
In those circumstances the supply is not for the treatment of the recipient of the supply (as the recipient is the hospital rather than the patient). Therefore the supply is not GST-free under the legislation.
You have indicated that your health services are arranged by Entity A on their own behalf for you to provide services to Entity A and you bill Entity A directly (rather than the patient). This indicates that Entity A is the recipient of the supply. Therefore your supply of the health services is not GST-free. In these circumstances the supply of your health services will be subject to GST where the requirements of a taxable supply are met.
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