Edited version of your written advice

Authorisation Number: 1051385928584

Date of advice: 18 June 2018

Ruling

Subject: Other health services

Question 1

Are the services provided directly to individual persons GST-free by virtue of section 38-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Your supplies of physiotherapy services are GST-free.

Question 2

If the answer to question 1 is yes, does this GST-free treatment also cover situations whereby the services are provided by staff that do not meet the definition of a recognised professional but who are nevertheless supervised by a recognised health professional?

Answer

Yes, where the exercise physiologists and exercise scientists assist the Physiotherapist to supply the service to the client, their services will also be GST-free.

Relevant facts and circumstances

You provide medical strength training via physiotherapy and exercise physiology/science intervention for preventative and rehabilitation purposes using specialised techniques and medical apparatus.

You do not provide cardio or general fitness training and have no equipment (e.g. treadmills etc) which would allow this. You provided examples of the apparatus showing that it is specifically designed to isolate and target specific muscle groups.

In order to provide the relevant services to clients, you employ formally qualified physiotherapists, exercise physiologists and exercise scientists as follows:

Physiotherapist

A minimum qualification of Bachelor of Physiotherapy and a requirement to meet the minimum standards of the Australian Health Practitioner Registration Agency (AHPRA).

Accredited Exercise Physiologist

Qualified as Masters in Clinical Exercise Physiology and a Bachelor of Exercise Science or Sports Science or Human Movement with Applied Science (terminology differs depending upon University).

Ongoing requirement to meet the minimum membership standards of Exercise and Sports Science Australia (ESSA) and to meet the minimum standards of the National Alliance of Self Regulating Health Professionals (NASRHP). This includes attaining 20 CPD points, completion of first aid and CPR, renewal of registration and holding appropriate professional indemnity insurance.

Exercise Scientist

Qualified Bachelor of Exercise Science or Sports Science or Human Movement with Applied Science (terminology differs depending upon University).

Ongoing qualification – either:

● ESSA member and required to meet the minimum standards of the NASRHP. This includes attaining 20 CPD points, completion of first aid and CPR, renewal of registration and holding appropriate professional indemnity insurance.

● Non-ESSA member – No defined CPD points required, however, these professionals undertake monthly internal professional development programs, which is the same training program and equivalent of 20 CPD points that ESSA members complete. Additionally, they will also hold professional indemnity insurance.

The provision of the services to clients is performed under a high level of supervision.

For the majority of the time that the facility is open (more than 90% of the time) there are physiotherapists rostered on who are either directly or indirectly supervising client’s independent medical rehabilitation programs on the training floor or undertaking one on one consultations with individual clients.

At all times that the facility is open there is an exercise physiologist/scientist on the training floor supervising the client’s medical rehabilitation programs.

All clients partaking in a program are managed by both a physiotherapist and exercise physiologist/scientist through the case management system. This includes a regular one on one appointment with both physiotherapist and exercise physiologist, technique and exercise progression focus on the training floor and regular case management phone calls discussion their progression.

In addition, on a weekly basis, your physiotherapists, exercise physiologists and exercise scientists undertake case conferences in the team meeting to discuss client care and outcomes for clients.

Client Experience Example:

Client comes in and sees a physiotherapist for an assessment and/or treatment as per the physiotherapist’s rehabilitation treatment plan. From that session the client then undertakes the training on the training floor where a physiotherapist/exercise physiologist/exercise scientist (interchangeable) is monitoring the training floor and guiding the client on the successful completion of their treatment plan. The following week the client’s case is discussed by the physiotherapist/exercise physiologist/exercise scientist and changes are made to the program for when they come in next.

You are (confidentially) the preferred provider under an arrangement with a large government agency as an early injury prevention manager for those that have pain, aches, niggles or are at risk of injuring themselves due to weakness, dysfunction, postural issues or the nature of their role. The individuals undertake an assessment by the physiotherapist and a medical strengthening rehabilitation program dictated and managed by the physiotherapist and delivered by the physiotherapist and exercise physiologist/scientist. You also provide the same program for a well-known self-insured company.

In addition, you are a provider of rehabilitation intervention for both TAC and WorkSafe clients who undertake a medical strengthening rehabilitation program dictated and managed by the physiotherapist and delivered by the physiotherapist and exercise physiologist/scientist.

Approximately 90% of your clients’ programs are for exact diagnosed medical purposes. The remainder, being generally over 50 years of age, are treated for general health and wellbeing with a direct link to the advantage of training using the scientific based methodology to prevent deterioration due to osteopenia, osteoporosis, diabetes, back pain, loss of muscle bulk etc. The methodology directly correlates with the Australian Health Recommendations for such chronic health conditions.

In relation to the above supplies, the current program model is structured as follows:

● One on one meetings with a physiotherapist or exercise physiologist/scientist

● Case management by a physiotherapist AND exercise physiologist/scientist

● Regular physiotherapist and exercise physiologist/scientist phone call management; and

● Physiotherapist guided team facility case conference management

Relevant legislative provisions

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

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

Reasons for decision

38-10 Other health services

(1) A supply is GST Free if:

(a) it is a service of a kind specified in the table in this subsection, or of a kind specified in the regulations; and

(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.

Physiotherapy is listed at Item 17 of the table in subsection 38-10. Exercise physiology and exercise science are not.

Section 38-10(1)(b) requires the supplier of the service of the kind specified in the table to be a *recognised professional. *Recognised professional is defined in section 195-1 as:

... a person is a *recognised professional, in relation to the supply of a service of a kind specified in the table in sub-section 38-10(1), if:

(a) the service is supplied in a State or Territory in which the person has a 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, or

(b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind, or

(c) in the case of services covered by Item 3 in the table - the service is supplied by an accredited service provider within the meaning of section 4 of the Hearing Services Administration Act 1997.

In relation to paragraph (a) above, many State and Territory laws regulate the registration of persons for the services listed in the Table. It is considered that the word 'prohibiting' includes a law that regulates the holding out of the provision of certain services. Such restrictions will be sufficient for the purposes of paragraph (a) of the definition of '*recognised professional' and to constitute an act 'prohibiting the supply'.

Physiotherapists must be registered with the Physiotherapy Board of Australia, and meet the Board's Registration Standards, in order to practise in Australia. Therefore, the supplies made by your physiotherapists meet paragraph 38-10(1)(b).

Where a person other than the recognised professional provides a component of the supply, for section 38-10 that component will not be GST-free unless that person is also a recognised professional, or the component of the supply is directly supervised by the recognised professional or is GST-free under another provision. It is considered that a person will be directly supervised where the *recognised professional:

● attends the patient at the commencement of the treatment and at the subsequent commencement of each new treatment, and

● is readily available for the whole of the time that the assistant is working with the patient, and

● that the *recognised professional be available to take appropriate action in the case of an emergency, and

● determines all of the appropriate treatment to be provided by the assisting person, and

● can satisfactorily prove that they monitor the services of the unqualified staff.

Based on the facts you have provided, a physiotherapist provides initial assessment and formulation of a rehabilitation treatment plan and are generally available throughout the completion of the exercises. Additionally, weekly case discussions between physiotherapists and their assistants ensure their treatment plan is monitored. Therefore, where the exercise physiologists and exercise scientists assist the physiotherapist to supply the service to the client, their services will also be GST-free.

The third requirement is that the service must be generally accepted in the professions associated with supplying services of that kind as being necessary for the appropriate treatment of the recipient of the supply. 'Appropriate treatment' is not defined in the GST Act.

It is considered that 'appropriate treatment' will be established where the recognised professional 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 that recipient insofar as that *recognised professional's particular area of training allows and will include subsequent supplies for the determined process.

'Appropriate treatment' includes the principles of preventative medicine. Such treatment must be generally accepted in the profession associated with supplying services of that kind, as being necessary.

In this case, the physiotherapy services are conducted by a registered physiotherapist and are generally accepted in the profession as being necessary for the appropriate treatment of the recipient of the supply. Therefore, you are making a GST-free supply under subsection 38-10(1) of the GST Act when you supply physiotherapy services.

Third party supplies

In some circumstances, the '*recipient of the supply' is not the patient of the professional but is a third party such as an employer. 'Appropriate treatment' will not include supplies undertaken for a third party, which does not encompass treatment.

For example, an insurance company is a third party who may be the actual '*recipient of the supply', where an assessment of a person is made for insurance purposes and there is no appropriate treatment involved so that such a supply will be taxable.

However, as explained in GSTR 2006/9 Goods and services tax: supplies:

156A. Under certain multi-party arrangements, an entity may make a GST-free supply of goods or services to an individual which results in the supplier making a further supply to a third party. The supply made to the third party will not be GST-free under provisions within Subdivision 38-B that require the individual receiving the relevant goods or services to be the recipient of the supply. However, in some cases the supply will be GST-free under section 38-60.

156B. Where an entity makes a supply to an insured person and that supply is either wholly or partly GST-free under Subdivision 38-B (the underlying supply), a supply of the service of making the underlying supply by the entity to an insurer, in the course of settling insurance claims under an insurance policy (including private health insurance policies and taxable insurance policies) of which the insurer is an insurer, is GST-free under subsection 38-60(1) to the extent that the underlying supply is GST-free. For the purposes of subsection 38-60(1), an operator of a statutory compensation scheme is treated as an insurer and a claim for compensation under the statutory compensation scheme is treated as a claim under an insurance policy.

156C. Where an entity makes a supply to an individual and that supply is either wholly or partly GST-free under Subdivision 38-B (the underlying supply), a supply of the service of making the underlying supply by the entity to an operator of a compulsory third party scheme is GST-free under subsection 38-60(2) to the same extent as the underlying supply.

156D. Where an entity makes a supply to an individual and that supply is either wholly or partly GST-free under Subdivision 38-B (the underlying supply), a supply of the service of making the underlying supply by the entity to an Australian government agency is GST-free under subsection 38-60(3) to the same extent as the underlying supply.

156E. However, the supplier and the recipient of the supply may agree for a supply not to be treated as GST-free under section 38-60.

Therefore, where you supply a service to a government agency (including TAC and WorkSafe) and the underlying supply to the individual client is GST-free under s38-10 then, to that extent, the supply to the government agency will also be GST-free.

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).