Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012486772330

Disclaimer:

You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.

The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.

The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Ruling

Subject: GST and supply of non-emergency patient transport services

Question

Is the supply of non-emergency patient transport services under an agreement with a government agency GST-free pursuant to subsection 38-10(5) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supply of non-emergency patient transport services to the government agency is not GST-free pursuant to subsection 38-10(5) of the GST Act but is GST-free pursuant to subsection 38-60(3) of the GST Act to the extent that that supply is made on or after 1 July 2012.

Relevant facts and circumstances

Entity X (X) provides non-emergency patient transport services to a government agency (Y) in a specified State/Territory (the specified State).

The parties have provided a copy of the original agreement and a deed of variation to the agreement.

The original agreement provides that the purpose of the agreement is for the provision of non-emergency patient transport services to be provided by X as required by Y to eligible individuals (patients) in the specified State.

The deed of variation amended the purpose of the agreement to state that the agreement relates to provision of ambulance and non-emergency patient transport services to the patients, under which Y accepts the financial responsibility for those services.

According to the terms and conditions of the agreement:

X and Y advised that the services provided by X are administered by X's employees. All of X's employees are qualified and each vehicle always carries two qualified staff members.

X and Y further advised that the services were provided to patients who are medically unsuitable for private or public transport and who normally either require stretcher transport, require active management or monitoring during transit, have a condition that would cause the patient to be embarrassed or be unacceptable to other people on public transport, or are medically certified as requiring ambulance transport.

In the ruling request it was submitted that X supplies the service to the patient and that Y is a third party which provides the consideration for that supply:

It was submitted that the agreement was entered into pursuant to a number of sections of a specified Act in support of the submission that X was not providing its services to Y.

The ruling request also referred to paragraph 164 in Goods and Services Tax Ruling GSTR 2006/9 as well as a number of private rulings issued by the Australian Taxation Office (ATO), in support of the submission that X was not providing its services to Y.

X provided a list of the equipment carried in all patient transport vehicles. Each vehicle comes with a collapsible stretcher that can be transformed into a wheelchair if required. All non-emergency vehicles are equipped to manage the worst case scenario which is that the patient goes into cardiac arrest during transport.

X provided details of the licenses or permits held by X under relevant State legislation.

X advised that when the patient falls outside the scope of the agreement between X and Y then X would decline to transfer the patient.

Y advised that separate agreements are entered into for the provision of normal transport services, e.g., taxis that do not have medically qualified attendants. If the services were to be provided by a supplier that did not meet the qualification of an ambulance service, payments would need to be authorised under different provisions, if there were any.

The agreement between X and Y is only for the provision of non-emergency patient transport services in the specified State.

It was also submitted that the arrangement between the parties either is not governed by FCT v Secretary to the Department of Transport (Victoria) [2010] FCAFC 84 or if it was, section 38-60 of the GST Act preserved the GST-free status of the supply made by X.

X's Constitution states that X may carry on any business authorised by X's Constitution.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 9-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-10(5)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-60(3)

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

Reasons for decision

Summary

X is an 'ambulance service' for the purposes of subsection 38-10(5) of the GST Act, but the supplies made by X to Y prior to 1 July 20XX are taxable supplies under section 9-5 of the GST Act because the requirement in subsection 38-10(5) that those supplies are provided in the course of the treatment of the recipient of those supplies is not satisfied.

To the extent that X makes supplies to Y pursuant to the agreement on or after 1 July 20XX then we agree with the submission in the ruling request that those supplies are GST-free pursuant to subsection 38-60(3) of the GST Act.

Detailed reasoning

Taxable supply

Section 7-1 of the GST Act provides that GST is payable on taxable supplies and taxable importations.

A supply is a taxable supply if it meets all the requirements of section 9-5 of the GST Act:

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

GST-free supply:

Paragraph 9-30(1)(a) of the GST Act states that a supply is GST-free if it is GST-free under Division 38 or under a provision of another Act.

Section 38-10 of the GST Act deals with the supply of 'other health services' that are GST-free. Subsection 38-10(5) of the GST Act states:

'Recipient' is defined in section 195-1 of the GST Act, in relation to a supply, to mean the entity to which the supply was made.

For a supply to be GST-free under subsection 38-10(5) of the GST Act, the supply must meet two requirements. That is the supply must be:

First requirement - provided by an ambulance service:

Is X an 'ambulance service'?

The ATO's definition of 'ambulance service' for the purposes of subsection 38-10(5) of the GST Act is set out in the ATO Interpretative Decision ATO ID 2005/185 which states:

We do not consider that part (3) of the 'ambulance service' definition in ATO ID 2005/185 applies to X.

Part (2) of the 'ambulance service' definition requires consideration of the State or Territory in which the relevant entity operates. X is not an entity that is permitted to operate as an ambulance service under the law of the specified State. Consequently X does not satisfy part (2) of the 'ambulance service' definition in ATO ID 2005/185.

That leaves part (1) of the 'ambulance service' definition in ATO ID 2005/185 to be considered.

Our review of State and Territory legislation confirmed that the reference in part (1) of the 'ambulance service' definition in ATO ID 2005/185 to

adopted definitions of 'ambulance services' or 'ambulance service' which, as at 1 July 2005, appeared in the Health Services Act 1987 (NSW), the Ambulance Service Act 1991 (Qld), the Ambulance Services Act 1992 (SA) (since repealed) and the Ambulance Service Act 1982 (Tas):

and defines 'ambulance' as:

The definitions of 'ambulance service' or 'ambulance services' used in New South Wales, Queensland and Tasmania refer to 'services' (or 'service') relating to the work of rendering' certain services, i.e. 'first aid' (New South Wales and Tasmania) or 'emergency treatment and patient care' (Queensland) to 'sick and injured persons' (New South Wales and Queensland) or 'persons suffering from illness or injury' (Tasmania). Each definition then refers to either 'and the transport of' (New South Wales and Queensland) or 'and the conveyance of' such persons.

The Macquarie Dictionary defines 'render' to include:

Similarly, part (1) of the 'ambulance service' definition in ATO ID 2005/185 in part turns upon the type of service which an entity renders:

We consider that X does render first aid or emergency treatment to and the transport of sick or injured persons.

Unlike the definitions of 'ambulance service' or 'ambulance services' in the New South Wales, Queensland, and Tasmanian legislation, part (1) of the 'ambulance service' definition in ATO ID 2005/185 refers to 'an entity that is primarily established for the purpose of rendering' the services described. X is an 'entity' as defined in section 184-1 of the GST Act, being a body corporate (which includes a Corporations Act 2000 (Cth) company - Miscellaneous Taxation Ruling MT2006/1, Para 31). In relation to the purpose for which X is 'primarily established', X's Constitution states that X may carry on any business authorised by X's Constitution. In our view, therefore, the purpose for which X is primarily established is determined by what X in fact does. As discussed above, the agreement indicates that X does render first aid or emergency treatment to and the transport of sick or injured persons. All of X's vehicles are equipped to manage the worst case scenario which is a patient going into cardiac arrest. The ruling request referred to X's services being administered by a Patient Transport Officer (who is trained in basic patient care and drives the vehicle and loads and unloads the patient) and either an Ambulance Transport Officer/Ambulance Officer (qualified as a paramedic who is responsible for patient care during transportation) or a nurse (qualified as a Critical Care Division 1 nurse). X has advised that it supplies two qualified staff per vehicle.

We therefore consider that the supply made by X pursuant to the agreement is a supply which is made by an 'ambulance service' as required by subsection 38-10(5) of the GST Act.

Second requirement - provided in the course of the treatment of the recipient of the supply:

Subsection 38-10(5) of the GST Act states that a supply provided by an ambulance service is GST-free if it is provided in the course of the treatment of the recipient of the supply. 'Recipient' is defined in section 195-1 of the GST Act in relation to a supply to mean the entity to which the supply is made.

ATO ID 2005/185 explains the second requirement in subsection 38-10(5) of the GST Act as follows:

In the ruling request the parties relied on paragraph 164 of Goods and Services Ruling GSTR 2006/9:

and a number GST private rulings issued by the ATO.

In the ruling request Y referred to certain provisions in a specified Act which governs Y's activities to support the submission that Y was not the recipient of the supply made by X and that that supply was made by X to the patient and therefore provided in the course of the treatment of the recipient.

In our view Y is obliged pursuant to the specified Act to arrange for the provision of the non-emergency patient transport services either by providing the services itself or entering into arrangements with third parties for those third parties to provide the services to the patients.

Where Y arranges for third parties to provide the services to the patient we consider that Proposition 13 in GSTR 2006/9 applies (where 'A' is Y, 'B' is X and 'C' is the patient):

We note that paragraph 164 in GSTR 2006/9, which X and Y relied on in the ruling request, involves an arrangement that is different to that between X and Y and different to that described in Proposition 13. Consequently we do not agree with the submission made in the ruling request that the specified Act indicates that Y does not enter into contracts under which it acquires services for entitled persons but merely accepts financial responsibility for those services. In our view the specified Act allows Y to enter into agreements with a third party (e.g. X) for the third party to provide a supply to the patient, in which case for GST purposes X makes a supply to Y.

The agreement:

Taking into account the changes made to the agreement by the deed of variation, we do not agree with the submission in the ruling request that Y merely accepts financial responsibility for payment.

We understand that the intention of the deed of variation was to bring the agreement within the arrangement described paragraph 164 of GSTR 2006/9, i.e. where the patient is the recipient of the supply made by X (so that that supply is in the course of the treatment of the recipient of the supply and is therefore GST-free) and Y merely pays X on behalf of the patient.

Our view is that if Y was merely a third party payer (per Para 164 in GSTR 2006/9) and not recipient (per Proposition 13 in GSTR 2006/9) X would not have remained subject to various obligations in favour of Y pursuant to the agreement as amended by the deed of variation. For example, X agrees it will not use any subcontractors without Y's approval on a case by case basis. Y retains the power to approve the use of a subcontractor by X. X also remains obliged to conduct X's activities in accordance with Y's service Charter and the Australian Public Service values. Y requires X to adhere to standards by which Y is bound as a government agency. X also agrees to maintain insurance so as to properly protect X's and Y's interests. The process set out in the agreement gives Y an absolute discretion to accept financial responsibility for services similar to those offered by X which are supplied by third parties. If Y was merely a third party payer in respect of supplies made by X to a patient, such a clause would be unnecessary.

In our view X makes a single supply pursuant to the agreement and Y is the recipient of that supply. For this reason the supply does not meet the second requirement of subsection 38-10(5) of the GST Act and therefore is not GST-free under subsection 38-10(5). The supply of ambulance services made by X to Y prior to 1 July 2012 is a taxable supply as the supply meets all the requirements of section 9-5 of the GST Act.

X and Y, in their submission have made reference to a number of private rulings. We consider that the arrangement between X and Y differs from the arrangements described in those rulings. It should also be noted that each private ruling is based on a specific set of circumstances advised to the ATO and is considered binding only in respect of the person/s or entity/ies on whose behalf the advice was sought.

Supplies after 1 July 2012 - Subsection 38-60(3) of the GST Act:

Subsection 38-60(3) of the GST Act states:

Subsection 38-60(3) of the GST Act applies to supplies made on or after 1 July 2012.

Where X makes supplies to Y pursuant to the agreement on or after 1 July 2012 then we agree with the submission in the ruling request that those supplies are GST-free pursuant to subsection 38-60(3) of the GST Act.

We consider that paragraph 38-60(3)(a) of the GST Act is satisfied because X makes the supply to an 'Australian government agency' which is defined in Division 995 of the Income Tax Assessment Act 1997 to mean, inter alia, an authority of the Commonwealth and would include Y.

Paragraph 38-60(3)(b) of the GST Act requires that the service supplied to an Australian government agency:

We consider that the purpose of subsection 38-60(3) of the GST Act is to ensure that the same GST-free treatment is afforded to the payer (i.e. Y) as is afforded to the supply of goods or services made to the patient and that subsection 38-60(3) of the GST Act is not intended to be limited to cases similar to FCT v Secretary to the Department of Transport (Vic) [2010] FCAFC 84, but also applies to cases where the relevant supply is made to an Australian government agency and provided to an individual. The intended breadth of subsection 38-60(3) is also supported by subsection 38-60(4) which gives taxpayers the option of agreeing to continue to treat a supply as taxable notwithstanding that that supply would be GST-free under subsections 38-60(1), (2) or (3) of the GST Act. We therefore consider that paragraph 38-60(3)(b) of the GST Act is satisfied in the present case.

Paragraph 38-60(3)(c) requires that at least one of the 'other supplies' (i.e. the supplies of goods or services made to the patient) is GST-free. We consider that this requirement is satisfied because the present case is analogous to Example 1 in Class Ruling CR 2013/14 (paragraphs 56-58) which states:

Example 1 - supply of health services by a dentist to an insurer

As the requirements of subsection 38-60(3) are satisfied we consider that supplies made by X to Y on or after 1 July 20XX pursuant to the agreement are GST-free.

However, the supplies would not be GST-free if the parties agree for the supplies not to be treated as GST-free (subsection 38-60(4) of the GST Act).


Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).