Edited version of your written advice

Authorisation Number: 1051346843417

Date of advice: 8 March 2018

Ruling

Subject: GST and supply of medical consulting services

Question

Are you making a GST-free supply of medical consulting services?

Answer

No.

Relevant facts and circumstances

● You were a registered medical practitioner and have retired as of 1 January 201X.

● Your name has been removed from the medical register and you are registered for GST.

● You have commenced a new business and you are working as a health advisor.

● You are not registered under any law of the States or Territories.

● You provide consulting services on natural therapy and administer limited treatment.

● The patients pay you directly for your services and your services are not covered by Medicare benefits or health insurance.

Relevant legislative provisions

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 38-7

A New Tax System (Goods and Services Tax) Act 1999 – Division 40

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

Health Insurance Act 1973

Reasons for decision

A supply is a taxable supply where the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied.

You make a taxable supply if you make the supply for consideration; and the supply is made in the course or furtherance of an enterprise that you carry on; and the supply is connected with indirect tax zone; and 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.

Supply of medical consultation services is not input taxed under Division 40 of the GST Act. Therefore, we need to consider whether the supply of medical consultation services is GST-free under Division 38 of the GST Act.

Under section 38-7 of the GST Act, a supply of a medical service is GST-free. For the purposes of the GST Act, a medical service is defined in section 195-1 of the GST Act as:

● a service for which a Medicare benefit is payable, or

● 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.

Medicare benefit is not payable on your supply of medical consultation services. Therefore, the first limb of section 38-7 of the GST Act is not applicable. Where the first requirement is not met, the requirements of the second limb of the definition of medical service must be met. That is, the supply is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

Appropriate treatment is established where a practitioner assesses the recipient’s state of health and determines a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of the recipient and includes subsequent supplies for the assessed process.

The second limb of the definition of medical service contains a number of elements. All of these elements much be satisfied before the service will be a medical service under the second limb.

Service must be supplied by medical practitioner

The first element is that the service must be supplied by or on behalf of a medical practitioner or an approved pathology practitioner. Section 195-1 of the GST Act defines medical practitioner as a person who is a medical practitioner for the purposes of the Health Insurance Act 1973.

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 but does not include a person so registered or licensed:

(a) whose registration, or license to practice, as a medical practitioner in any State or Territory has been suspended, or cancelled, following an inquiry relating to his or her conduct; and

(b) who has not, after that suspension or cancellation, again been authorised to register or practice as a medical practitioner in that State or Territory.

You have requested the authorities to remove your name from the medical register. You also not registered under any law of States or Territories to perform the medical consultation services. Therefore, your supply of medical consultation services will not satisfy the first element of services must be supplied by a medical practitioner.

Appropriate treatment

The second element is that the service supplied must be generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

‘Appropriate treatment’ will be established where the practitioner assessed the recipient’s state of health and determines a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of the recipient and will include subsequent supplies for the assessed process. Appropriate treatment includes the principles of preventative medicine.

In addition, the definition requires the treatment must be generally accepted in the medical profession as being necessary. The particular service being provided by the practitioner and the circumstances in which it is provided must be generally accepted by the medical profession. The words ‘generally accepted in the medical profession’ indicate that it will ultimately be the medical profession that determines what services will be generally accepted.

As explained above, if your treatment is generally accepted in the medical profession, it will satisfy the second element of appropriate treatment.

Recipient of 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. In some circumstances, the recipient of the supply is not the patient of the practitioner but is a third party. Appropriate treatment will not include supplies undertaken for a third party that does not encompass the concept of treatment.

You provide the medical consulting services to the patients and they pay you directly. Therefore, it is considered that the recipient of your supply would be the patient.

Conclusion: Your supply of medical consulting services is not covered by Medicare and therefore the supply will not be GST-free under the first limb of the definition of medical services. Under the second limb all the elements should be satisfied. As explained above you are not a registered medical practitioner as your registration has been cancelled. Your supply of medical consulting services would not satisfy all the requirements of section 38-7 of the GST Act.

The supply of medical consulting services would be a taxable supply as you will receive consideration from your patients; the supply will be made in the course or furtherance of your enterprise; the supply is connected with indirect tax zone; and you are registered for GST.

Section 9-40 of the GST Act provides that you must pay the GST on any taxable supply that you make. Therefore, you are required to remit the GST to the ATO on your taxable supplies.

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