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This edited version has been archived due to the length of time since original publication.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: 1051533089645

Date of advice: 27 June 2019

Ruling

Subject: GST and supply medical and other services

Question 1

Will the supply of a service be a GST-free supply under subsection 38-7(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where the services have been requested by an external medical practitioner and the results are not reviewed or monitored or reported on by your contracted medical practitioner (scenario 1)?

Answer 1

No, the supply of a service, in the circumstances of scenario 1, will not be a GST-free supply under subsection 38-7(1) of the GST Act. The supply of the service will be a taxable supply under section 9-5 of the GST Act.

Question 2

Will the supply of a service be a GST-free supply under subsection 38-7(1) of the GST Act where the service has been requested by your contracted medical practitioners and the results later reviewed, interpreted and monitored by your contracted medical practitioner as part of a service that is eligible for a Medicare benefit (scenario 2)?

Answer 2

Yes, the supply of a service, in the circumstances of scenario 2, will be a supply of a GST-free medical service under subsection 38-7(1) of the GST Act.

Question 3

Will the supply of a service be a GST-free supply under subsection 38-7(1) of the GST Act where the service has not been requested by your contracted medical practitioner but the results are later reviewed and monitored by your contracted medical practitioner as part of a service that is eligible for a Medicare benefit (scenario 3)?

Answer 3

Yes, the supply of a service, in the circumstances of scenario 3, will be a supply of a GST-free medical service under subsection 38-7(1) of the GST Act.

Question 4

Will the supply of a service be a GST-free supply under subsection 38-7(1) the GST Act where the service has not been requested by a medical practitioner and the results are provided to the patient and none of your contracted medical practitioners are involved in reviewing, interpreting or monitoring the results as part of a medical service undertaken by you contracted medical practitioner (scenario 4)?

Answer 4

No, the supply of a service, in the circumstances described in scenario 4, will not be a GST-free supply under subsection 38-7(1) of the GST Act. The supply of the service will be a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances

You are registered for goods and services tax (GST). You operate a medical centre where you contract general practitioners (your GP) to provide medical services to patients of the clinic. Your GPs are medical practitioners for the purposes of the Health Insurance Act 1973.

Under the agreement you have with your GPs you are the supplier of medical services to patients undertaken by your GPs. Your GPs make supplies of their services to you.

The medical services supplied by you may include additional services the results from which may be reviewed and interpreted by your GPs and may form the basis of the patients ongoing monitoring of patients condition by your GPs.

A Medicare benefit is payable under Part II of the Health Insurance Act 1973 in respect of the medical services undertaken by your GPs supplied by you to patients.

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 Subsection 38-7(1)

Reasons for decision

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

A medical service is defined in 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; 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.

Services that have a Medicare benefit supplied by your GPs will be a service for which a Medicare benefit will be payable under Part II of the Health Insurance Act 1973 and as such will be a medical service under the first limb of the definition of medical service that will be GST-free.

Other GST-free supplies

The additional service for which a Medicare benefit is not payable must be addressed under the second limb of the definition of medical service in each of the scenarios described having regard to each scenario's particular circumstances.

The second limb of the definition of medical service contains a number of elements. All of these elements must be satisfied before the additional service is a medical service or part of a medical service under the second limb.

The first element is that the service must be supplied by or on behalf of a medical practitioner as defined in section 195-1 of the GST Act.

A service is performed on behalf of a medical professional if:

Questions 1 and 4

An essential requirement for the additional service to be performed on behalf of a GP is that the service is part of the service provided by your GP and your GP is involved in at least part of that particular service. The phrase 'on behalf of' for the purposes of the definition of medical service means performance of a component of the service provided by a practitioner that is not necessarily supervised by that practitioner.

With regards to scenario one and four, the GP is not involved in any part of the supply of the additional service. The additional service is neither requested by your GP nor reviewed or interpreted as part of the service undertaken by your GP. As such the additional service is not performed on behalf of your GP.

Accordingly the additional service you supply will not come within the definition of a medical service and will not be GST-free under subsection 38-7(1) of the GST Act. As such, the supply of the additional services in scenarios one and four will be a taxable supply under section 9-5 of the GST Act.

Question 2 and 3

With regard to scenario 2 the additional services are part of the service undertaken by your GPs. That is the patient's additional services are requested by your GP and with regard to scenario 3 although not requested by your GP the understanding is that the additional service will form part of the process to be reviewed and interpreted by your GP. The additional service is done on behalf of your GPs as part of the process of performing the service.

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

'Appropriate treatment' will be established where the 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 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 medical practitioner and the circumstances in which it is accepted in the medical profession indicate that it will ultimately be the medical profession that determines what services will be generally accepted.

The additional service performed on behalf of your GP as part of the service is assumed to be appropriate treatment that is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply. The additional service is reviewed by your GP and forms part of the service.

On the facts and assumptions provided the additional service, in the circumstances of scenario 2 and 3, which form part of the patient's service undertaken by your GPs will come within the definition of a medical service that will be GST-free under subsection 38-7(1) of the GST Act.

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