Edited version of private ruling

Authorisation Number: 1011786168133

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Ruling

Subject: GST and health services

Question

Are you making a GST-free supply when you supply your services as a sexologist to your clients?

Answer

No, you are not making a GST-free supply when you supply your services as a sexologist to your clients.

Relevant facts and circumstances

You are registered for GST.

You are providing services as a sexologist.

You are billing your clients directly.

Your services as a sexologist can be likened to psychologists or therapists.

You are not registered under state law to practice as a psychologist.

You have undertaken the following studies to become a sexologist:

Graduate Diploma in Counselling

Graduate Diploma in Health Sciences (Sexual Health)

You are a member of the Counsellors and Psychotherapists Association (CAPA), Psychotherapy and Counselling Federation of Australia (PACFA) and Australian Society of Sex Educators, Researchers and Therapists (ASSERT).

Your have provided a copy of your business card which reflects that you are a sexologist providing personal and relationship counselling and sex therapy.

You advised that there is no Medicare rebate payable for the services you supply as a sexologist.

Reasons for decision

In considering whether a supply is subject to GST, regard must be had to section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) which states :

You make a taxable supply if:

(a)     you make the supply for consideration; and

(b)     the supply is made in the course or furtherance of an enterprise that you carry on; and

(c)     the supply is connected with Australia; and

(d)     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.

From the information received, the supply of your services as a sexologist will satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act when you make the supply of your services as a sexologist for consideration, in the course of your enterprise, the supply is connected with Australia as you carry on your business in Australia and you are registered for GST.

However, your supply will not be a taxable supply to the extent that it is GST-free or input taxed. The supply of your services as a sexologist is not input taxed under any provisions of the GST Act or any other Act. Therefore, what is left to be considered is whether the supply of your services as a sexologist is GST-free.

Division 38 of the GST Act provides that certain supplies relating to health are GST-free. In your case the relevant provisions to examine are section 38-7 and section 38-10 of the GST Act.

Medical services

Section 38-7 of the GST Act provides that a supply of a medical service is GST-free. The term medical service is defined in section 195-1 of the GST Act to mean:

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

(b) 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.

The definition of a medical service has two limbs. The supply of a medical service that falls within either the first or the second limb of the definition in section 195-1 of the GST Act is GST-free. The first limb merely requires that the supply is one for which the specified Medicare benefit is payable. Unlike the second limb, the supply does not have to be made by a medical practitioner or an approved pathology practitioner (as defined in section 195-1 of the GST Act). The second limb addresses services for which a Medicare benefit is not payable.

You advised that a Medicare benefit is not payable for your services as a sexologist. As no Medicare benefit is payable for your services as a sexologist, the first limb in paragraph (a) of the definition of a medical service in section 195-1 of the GST Act is not met and the services must be considered under the second limb in paragraph (b) of the definition of a medical service in section 195-1 of the GST Act.

Only those services supplied by or on behalf of a medical practitioner or approved pathology practitioner will qualify as a medical service under the second limb in paragraph (b) of the definition of a medical service in section 195-1 of the GST Act.

The phrase on behalf of does not include a service performed as a result of referral by a medical practitioner or approved pathology practitioner. A service performed as a result of referral by another person, is not a component of the supply being provided by the first practitioner. It is a separate service, the GST status of which must be considered independently.

You advised that you provide the services as a sexologist to your clients and bill your clients directly. As such, the services are not provided by or on behalf of a medical practitioner or approved pathology practitioner and the second limb in paragraph (b) of the definition of a medical service in section 195-1 of the GST Act is not met.

As the supply of the services as a sexologist does not meet the definition of a medical service then the supply is not GST free under section 38-7 of the GST Act.

The other relevant provision to consider is section 38-10 of the GST Act.

Other health services

Subsection 38-10(1) of the GST Act provides that a supply of health services 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.

All three requirements in subsection 38-10(1) of the GST Act must be satisfied for a supply of health services to be GST-free under that subsection.

The Australian Taxation Office fact sheet: GST and other health services (NAT 4650) provides guidance on the GST treatment of certain health services. This fact sheet is available at www.ato.gov.au. Further, the Health Industry Partnership-Issues Register, also available at www.ato.gov.au provides a discussion on other health services at issue 2.a.

There are 21 health services listed in the GST Act:

The first requirement in paragraph 38-10(1)(a) of the GST Act is that you must supply one of the services listed in the table above. The second requirement in paragraph 38-10(1)(b) of the GST Act is that the supplier must be a recognised professional in relation to the supply of the listed services, that is, the listed service must be performed by a recognised professional of the listed service.

Section 195-1 of the GST Act provides that a recognised professional, in relation to the supply of services of that kind is a person who:

· is registered, permitted or approved under state or territory law to supply the listed health service, or


· if there is no relevant state or territory law, is a member of a professional association that has uniform national registration requirements relating to the supply of the health service.

The third requirement in paragraph 38-10(1)(c) of the GST Act is that the listed service supplied is generally accepted in that health profession associated with supplying services of that kind as being necessary for the appropriate treatment of the recipient of the supply.

In your case, you have advised that you provide the services as a sexologist to your clients and bill your clients directly. However, the services as a sexologist is not a listed service in the table above and accordingly the first requirement in paragraph 38-10(1)(a) of the GST Act has not been met.

However, your services as a sexologist may be considered to be standard techniques or a component of a supply of one or more of the services listed in the table above. You advised that a sexologist may be providing some of the listed services such as psychology under item 16 however you as a sexologist are not a recognised professional in relation to the supply of the listed service of psychology as required by paragraph 38-10(1)(b) of the GST Act. You may be qualified in sexology but you are not a recognised professional in one of the 21 health services listed in the above table.

In your state, the supply of psychology services is regulated by State law, and therefore a person needs to be registered under the relevant State law so as to be a recognised professional (as defined in section 195-1 of the GST Act) in relation to the supply of psychology services.

You advised that you are a member of the Counsellors and Psychotherapists Association (CAPA), Psychotherapy and Counselling Federation of Australia (PACFA) and Australian Society of Sex Educators, Researchers and Therapists (ASSERT).

However, as you are not registered for the provision of psychology under the relevant Act, you are not considered as a recognised professional in relation to the supply of that listed service (psychology) for the purposes of paragraph 38-10(1)(b) of the GST Act.

As you do not meet all of the requirements of subsection 38-10(1) of the GST Act, then your supply of your services as a sexologist to your clients is not GST-free.

Summary

As your supply of your services as a sexologist to your clients is not GST-free under either section 38-7 or section 38-10 of the GST Act then your supply of your services as a sexologist to your clients will be a taxable supply where all the requirements of section 9-5 of the GST Act have been met.