Edited version of your written advice

Authorisation Number: 1051349796684

Date of advice: 23 March 2018

Ruling

Subject: GST and health services

Question

Is your supply of health services GST-free?

Answer

No. Your supply of health services is subject to GST.

Relevant facts and circumstances

● You are registered for the goods and services tax (GST).

● You provide a health service in a number of private hospitals.

● You have an agreement with each hospital to provide your services and provided a signed copy of an agreement.

● You invoice the hospitals directly for your services.

● There is no medicare benefit payable for the services you provide as you are not a doctor.

● You provide your services using the hospital’s equipment and disposables.

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 38-7

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

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

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

Reasons for decision

Under section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) GST is payable on taxable supplies.

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

● it makes a supply for consideration

● the supply is in the course or furtherance of an enterprise that it carries on

● the supply is connected with the indirect taxation zone, and

● the entity is registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Your supply of health services meets the positive requirements of 9-5 and are not input taxed. Therefore they will be taxable supplies unless they are GST-free.

In determining whether your health services are GST-free it is necessary to consider the relevant GST-free health provisions in the GST Act.

Health services

Certain health services are GST-free under section 38-10 of the GST Act. Under subsection 38-10(1), an entity makes a GST-free supply if:

● the entity supplies a service of a kind specified in the table in subsection 38-10(1) of the GST Act, or of a kind specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)

● the entity is a recognised professional in relation to the supply of services of that kind, and

● 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.

The health services you provide are not a service listed in the table in subsection 38-10(1) of the GST Act. There is currently no GST Regulation made in respect of subsection 38-10(1) of the GST Act. Therefore, your services are not GST-free under subsection 38-10(1).

Medical services

Under subsection 38-7(1) of the GST Act the supply of a medical service is GST-free.

A 'medical service' is defined under section 195-1 of the GST Act to mean:

● a service for which medicare benefit is payable under Part II of the Health Insurance Act 1973 (HIA); 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.

With respect to the first limb of the definition of ‘medical service’, you have advised that no medicare benefit is payable for the health services you provide. In any case, you contract with the hospital to provide your services and invoice that hospital directly. As such, you are making supplies to the hospital. The hospital cannot claim a medicare benefit in its own right for the supply to it. A medicare benefit is only payable under the HIA to an individual (who may assign it to another party). In these circumstances, if a medicare benefit is payable, it is for the supply by the hospital to the individual patient.

Consequently your services to the hospital do not fall within the first limb of the definition of 'medical service' under section 195-1 of the GST Act. Therefore, it is necessary to determine whether you are making a supply under the second limb of that definition.

The first requirement of the second limb of the definition of 'medical service' is that the service is provided by or on behalf of a medical practitioner or approved pathology practitioner.

An approved pathology practitioner is not relevant to your circumstances.

‘Medical practitioner’ is defined in section 195-1 of the GST Act as a person who is a medical practitioner for the purposes of the HIA – which defines medical practitioner as:

"medical practitioner” means 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 licence to practise, 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 practise as a medical practitioner in that State or Territory.

You are not a doctor and do not meet the definition of a medical practitioner.

In terms of whether the service is provided ‘on behalf of’ a medical practitioner, you contract with the hospital not a medical practitioner. Therefore this does not apply in your circumstances.

Consequently your services are not provided by or on behalf of a medical practitioner or an approved pathology practitioner and you do not meet the second limb of the definition of ‘medical service’.

As you do not meet the definition of ‘medical service’, you are not making a GST-free supply under subsection 38-7(1) when you provide services to the hospital.

Hospital treatment

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

Section 195-1 of the GST Act defines 'hospital treatment' as having the same meaning as in the Private Health Insurance Act 2007 (PHI Act).

Section 121-5 of the PHI Act defines 'hospital treatment' as:

14. Hospital treatment is treatment (including the provisions of goods and services) that:

a. is intended to manage a disease, injury or condition, and

b. is provided to a person

i. by a person who is authorised by a *hospital to provide the treatment, or

ii. under the management or control of such a person; and

c. either

i. is provided at a hospital, or

ii. is provided, or arranged, with the direct involvement of a hospital.

* a defined term in the PHI Act.

‘Hospital treatment’ is only GST-free to the patient – partly due to the nature of the services and partly due to the words of the section. Subsection 121-5 of the PHI Act specifies that it can only be provided to a person who requires treatment at a hospital or with the direct involvement of a hospital.

In determining whether a supply is GST-free hospital treatment, the recipient of that supply must therefore be identified. Where a supply is made to an entity other than a patient, the supply will not be a supply of GST-free hospital treatment.

Your contractual arrangement is with the hospital to provide your services so the hospital is the recipient of your supplies of services. As such, your supplies are not GST-free hospital treatment.

You are registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 nor input taxed under Division 40. Therefore, you are making a taxable supply under section 9-5 when you provide your services to the hospital and your services are subject to GST.

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).