Edited version of your private ruling

Authorisation Number: 1012436030781

Ruling

Subject: GST and psychology services

Question 1

Is the supply of psychology services provided by you in Australia GST-free under Division 38 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

· You are an individual and registered for goods and services tax (GST).

· You are a registered health professional with the appropriate professional Board in Australia.

· You have a written agreement with a third party where you are contracted by the third party to provide services to their clients.

· A clause of the agreement provides that you will provide your services to the third party as directed by the third party to the clients of the third party.

· A further clause of the agreement provides that you may not subcontract or otherwise delegate any right or obligation under this engagement without the prior written consent of the third party's sole discretion and subject to such conditions as the third party considers necessary).

· A further clause of the agreement provides that all notes, records, files and other information pertaining to or in respect of a Client or any services provided to a Client, including without limitation any reports memoranda, notes, records, observations or other information created by you in respect of that Client are at all times the property of the third party.

· You bill the clients on behalf of the third party either directly or by bulk-bill.

· You authorise the third party to deal with Medicare with respect to the billing and collection of any fees.

· You are paid by the third party as per a clause of the Agreement.

· The third party is engaged by various schools, clubs and other bodies to provide registered psychologists to provide counselling and support services.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999:

Section 9-5

Section 38-10

Section 195-1

Reasons for decision

Summary

Your supply of services is not GST-free as the third party and not the patient is the recipient of your supply. In these circumstances the supply of your services will be subject to GST where the requirements of a taxable supply are met.

Detailed reasoning

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

All three of the requirements must be satisfied for a supply of psychology services to be GST-free under subsection 38-10(1) of the GST Act.

You provide health services and your particular health service is listed in the table in subsection 38-10(1) of the GST Act.

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

Your health service is a service that is specified in the table in subsection 38-10(1) of the GST Act. As such, the first requirement is satisfied.

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

For the purposes of this paragraph, a recognised professional must provide the health service.

Section 195-1 of the GST Act provides that a person is a recognised professional, in relation to a supply of services of a kind specified in subsection 38-10(1) of the GST Act (psychology services), 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.

A person practicing your type of health service is a 'recognised professional' if they are registered under a State or Territory law prohibiting the supply of those types of health services without such registration. As such, a health provider who is registered under the relevant State or Territory Act is a recognised professional under paragraph 38-10(1)(b) of the GST Act .

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

To satisfy the final requirement, the service must 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.

A health provider will provide 'appropriate treatment' to a client where they assess the client's state of health and determine a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of that client and includes subsequent supplies for that assessed process.

Paragraph 38-10(1)(c) of the GST Act also requires that the appropriate treatment be for 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'.

The specific wording in paragraph 38-10(1)(c) of the GST Act means that the supply of a psychology service is only GST-free under subsection 38-10(1) of the GST Act where an individual receiving the service is the recipient of the supply.

Where there are only two parties to the supply of a health service, the client and the health provider, the client will be the recipient of the supply of the service. This means that where a client engages a health provider to provide health services to them, the requirement in paragraph

38-10(1)(c) of the GST Act is satisfied.

In some cases, health providers may have agreements with third parties under which there is a binding obligation on the health provider to provide services to a client for which the third party is liable to pay. In these cases, the third party is the recipient of the supply. Depending on the arrangement, the health provider may also be making supplies to both the third party and the client.

Based on the facts provided, you are engaged by a third party in a contractor role. A clause of the agreement specifically states that you will provide your consultancy services to the third party and as directed by the third party to the Client, in a timely and professional manner consistent with professional standards and the third party's standards, guidelines and procedures attached to the agreement at Annexure A or as provided by the third party from time to time.

In this case it is the third party who is the the recipient of your services and not the patient. As a result, the third requirement of subsection 38-10(1) of the GST Act is not satisfied because a business entity cannot receive 'treatment'.

You bill the clients on behalf of the third party either directly or by bulk-bill. You authorise the third party to deal with Medicare with respect to the billing and collection of any fees and you are paid by the third party as per a clause of the agreement. It is considered that under the agreement, you make supplies to both the third party and the clients. The third party is the recipient of professional services and the clients are the recipients of health services.

The supply that you make to the third party is not the supply of health services. You make a supply of professional services and as such, the requirement in paragraph 38-10(1)(c) of the GST Act that the supply be for the appropriate treatment of the recipient of supply is not satisfied.

Therefore, the supply of your services in these cases will not be GST-free.

Rather, the supply will be subject to GST where all of the requirements for a taxable supply are satisfied.

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 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.

The supply by you satisfies the requirements of section 9-5 of the GST Act and as such, you are making a taxable supply of professional services to the third party on which GST is payable.

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