Edited version of private ruling

Authorisation Number: 1011711718734

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Ruling

Subject: GST and the supply of osteopathy services

Question 1

Are you making GST-free supplies of health services when you provide your clients with osteopathic services through an osteopath that you have contracted?

Answer

Yes, you are making GST-free supplies of health services when you provide your clients with osteopathic services through an osteopath that you have contracted provided that the osteopath is a recognised professional (in osteopathy) and the services would generally be accepted as being necessary for the appropriate treatment of the person receiving the treatment.

Relevant facts and circumstances

You are registered for GST.

You carry on an enterprise that includes providing group exercising and rehabilitation services. You provide osteopathy services as part of these rehabilitation services.

You are not a qualified osteopath but you have a contractual arrangement with an osteopath to provide your clients with osteopathy services. The osteopath is registered with the relevant authority. They are also registered with Medicare Australia.

Your clients do not enter into a contract with the osteopath for the osteopathic services provided. You invoice your clients for the services provided by the osteopath. These services are invoiced to your clients separately from any other services you may have provided to your clients.

The osteopath assesses your client and determines the course of their treatment.

The osteopath provides his osteopathy services in a private room on your premises. The consultations are categorised either as initial or ongoing osteopathic consultations.

During the initial consultation, the osteopath acquires from the client their details such as their medical history and present complaints. He then conducts a physical examination of the client preceding a differential diagnosis, prognosis and treatment plan.

The osteopath uses the specified osteopathic techniques during a client's subsequent visits.

When the osteopath has provided the treatment to your clients, he invoices you for the osteopathy services provided. You have submitted to us a copy of an invoice the osteopath issued to you for 'osteopathic services' they supplied. These services are itemised as 'rehabilitation sessions' and were performed during specified periods.

Relevant legislative provisions

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

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

Reasons for decision

Subsection 38-10(1) of the GST Act provides that a supply of other health services is GST-free if:

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

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.

All of the above requirements must be satisfied for the supply of the osteopathy services to be GST-free.

Service of a kind specified in the table

To satisfy the requirement in paragraph 38-10(1)(a) of the GST Act (first requirement), the osteopathy services must be specified in the table in subsection 38-10(1) of the GST Act or the GST Regulations. At this stage, no regulations have been made in relation to section 38-10 of the GST Act.

There are 21 services listed in the table in subsection 38-10(1) of the GST Act and osteopathy services is listed at item 13.

Therefore, a supply of osteopathy services will satisfy the first requirement.

Note: as the other services you provide (such as the rehabilitation and group exercising services) are not listed, these services will not of themselves be GST-free as they fail to meet the first requirement.

Recognised professional

With respect to the requirement of paragraph 38-10(1)(b) of the GST Act (second requirement), section 195-1 of the GST Act defines a recognised professional for the purposes of the second requirement:

recognised professional: a person is a recognised professional, in relation to the supply of a service of a kind specified in the table in subsection 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.

The requirement that the supplier of a health service be a recognised professional, is given meaning by the context in which it appears. It is considered that in this context, it is taken to be a requirement that the person who actually performs the health service must be a recognised professional in relation to supplying services of that kind. Due to their very nature, a practice company or partnership can not itself perform the services it may supply through others, such as recognised professionals.

Therefore the second requirement focuses on the professional status of the person performing the health service, and requires that the person performing the health service be a recognised professional in relation to supplying services of the kind specified in the table in section 38-10 of the GST Act.

Where a person other than the recognised professional provides a component of the supply, 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.

You have provided evidence to show that the osteopath is a qualified osteopath who is authorised by the relevant authority. Therefore, the second requirement of section 38-10 of the GST Act will be met.

However, you have advised that you have received services from the osteopath prior to their registration with a government health board. In these circumstances services performed by the osteopath would not meet the second requirement. It follows that the services provided by you to your clients through the osteopath would not be GST-free.

Appropriate treatment

The requirement of paragraph 38-10(1)(b) (third requirement) is that the service must be generally accepted in the profession 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. 'Appropriate treatment' will not include supplies undertaken for a third party, which does not encompass treatment (for example, business to business transactions where the recipient of the supply is not the patient).

In your case, the recipients of your supplies of osteopathy services are your clients. Provided that the services from the osteopath are generally accepted in the osteopathy profession as necessary for the appropriate treatment, the third requirement is met.

Consequently, your supplies made to your clients of osteopathy services through your engagement of an osteopath are GST-free to the extent that the osteopath performing the services is a recognised professional and the services provided are generally accepted in the profession as necessary for their appropriate treatment.

Additional information: the services you acquire from health professionals (that you engage to treat your clients) is separate from the supply that you make to your clients. The services supplied to you by a health professional would not be GST-free as it is a business to business transaction and therefore would fail to meet the third requirement.