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This edited version has been archived due to the length of time since original publication.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.

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Edited version of private advice

Authorisation Number: 1012658667560

Ruling

Subject: Goods and services tax (GST) and medical services

Question 1

Is GST payable on the fees you receive from the private hospital?

Answer

Yes.

Question 2

Are you required to be registered for GST?

Answer

Yes.

Relevant facts and circumstances

You are not registered for GST.

You are licensed as a medical practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners.

You are contracted by a private hospital to provide assessment and treatment to patients of the hospital. The assessment and treatment would be generally accepted in the medical profession as being necessary for the appropriate treatment of the patient.

The hospital pays you fees. You will earn over $75,000 a year.

Medicare benefit is not payable in respect of the fees the hospital pays you.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

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

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 23-5

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-7(1)

A New Tax System (Goods and Services Tax) Act 1999 section 38-20

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

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-60(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-60(2)

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

A New Tax System (Goods and Services Tax) Act 1999 Division 188

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

Private Health Insurance Act 2007 section 121-5

Health Insurance Act 1973 section 3

Reasons for decisions

Questions 1 and 2

Summary

You are not making a GST-free supply of medical services or hospital treatment to the hospital.

You are not making a GST-free supply under section 38-60 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which deals with third party procured GST-free health supplies.

You are required to be registered for GST because you are carrying on an enterprise and your GST turnover is $75,000 or more.

Detailed reasoning

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

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

You meet the requirements of paragraphs 9-5(a) to 9-5(c) of the GST Act. This is because:

You are not registered for GST.

There are no provisions of the GST Act under which your supplies of the services in return for the fees are input taxed.

Therefore, what remains to be determined is whether you are required to be registered for GST and whether you are making GST-free supplies in return for the fees.

Subsection 38-7(1) of the GST Act provides that a supply of a medical service is GST-free.

Section 195-1 of the GST Act states:

medical service means:

Section 195-1 of the GST Act provides that medical practitioner means a person who is a medical practitioner for the purposes of the Health Insurance Act 1973.

Section 3 of the Health Insurance Act 1973 defines medical practitioner as a person registered or licensed as a medical practitioner under a law of a State or Territory that provides for the registration or licensing of medical practitioners.

Section 195-1 of the GST Act provides that recipient, in relation to a supply, means the entity to which the supply was made.

Subsection 38-20(1) of the GST Act states that a supply of hospital treatment is GST-free.

Section 195-1 of the GST Act states that hospital treatment has the same meaning as in the Private Health Insurance Act 2007.

Section 121-5 of the Private Health Insurance Act 2007 states:

Section 38-60 of the GST Act provides that where a health practitioner is contracted by a second entity to supply a service to the second entity of making a GST-free supply of a health service to a patient, the supply made to the second entity may be GST-free.

Section 38-60(1) of the GST Act states:

If:

the first-mentioned supply is GST-free to the extent that the other

supplies mentioned in paragraph (b) are GST-free under this

Subdivision.

Subsection 38-60(2) of the GST Act states:

If:

the first-mentioned supply is GST-free to the extent that the other

supplies mentioned in paragraph (b) are GST-free under this

Subdivision.

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

If:

the first-mentioned supply is GST-free to the extent that the other

supplies mentioned in paragraph (b) are GST-free under this

Subdivision.

The subdivision referred to in section 38-60 of the GST Act includes section 38-7 and section 38-20 of the GST Act.

Paragraph 155 of Goods and Services Tax Ruling GSTR 2006/9 discusses business to business supplies. It states:

Paragraphs 156A to 163 of GSTR 2006/9 discuss multi party arrangements. They state:

Paragraphs 30 to 33 of Goods and Services Tax Determination GSTD 2012/4 discuss the hospital treatment exemption. They state:

The private hospital in your case contracts you to supply services and therefore the fees you receive from the hospital are consideration for supplies you make to the hospital.

Medicare benefit is not payable in respect of your supplies of services to the hospital.

You are licensed as a medical practitioner under a State or Territory law that provides for the registration or licensing of medical practitioners. Therefore, you are a medical practitioner.

As the fees are consideration for supplies you make to the hospital, the hospital is the recipient of the relevant supplies. The services you supply to the hospital are not for the treatment of the hospital. Therefore, the supplies you make in return for the fees are not for the treatment of the recipient of the supply.

Hence, the supplies you make in return for the fees are not supplies of medical services for the purposes of subsection 38-7(1) of the GST Act. Therefore, you do not make GST-free supplies under subsection 38-7(1) of the GST Act in return for the fees.

The supplies you make in return for the fees are not supplies of hospital treatment as the recipient of the supplies you make in return for the fees (the hospital) is not the individual patients. Therefore, you do not make GST-free supplies under subsection 38-20(1) of the GST Act in return for the fees.

The private hospital is not an insurance company, compulsory third party scheme operator or Australian government agency. Hence, you do not meet the requirements of subsection 38-60(1), subsection 38-60(2) or subsection 38-60(3) of the GST Act. Therefore, you are not making GST-free supplies to the hospital under section 38-60 of the GST Act.

There are no other provisions of the GST Act under which your supplies to the hospital are GST-free.

GST registration

Section 23-5 of the GST Act provides that an entity is required to be registered for GST if:

You are required to be registered for GST because you are carrying on an enterprise and your GST turnover is $75,000 or more. Therefore, you meet the requirement of paragraph 9-5(d) of the GST Act.

(Note that if you made GST-free supplies for consideration, these supplies would be included in the GST turnover calculation.)

As you meet all of the requirements of section 9-5 of the GST Act, you are making taxable supplies to the hospital. Therefore, GST is payable on the fees that the hospital pays you.


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