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Ruling

Subject: GST and counselling services

Question

Is the supply of counselling services GST-free under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supply of counselling services is not GST-free under the GST Act. It is a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances

The entity is a qualified counsellor who provides counselling services to individuals who are referred to the entity by their general practitioners and other medical professionals.

The entity is a member of a professional association and is required to be registered for the goods and services tax (GST).

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 Division 38

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-10(1)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(c)

A New Tax System (Goods and Services Tax) Act 1999 Division 40

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

Reasons for decision

Under subsection 7-1(1) of the GST Act, GST is payable on taxable supplies and taxable importations.

Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make.

You make a taxable supply under section 9-5 of the GST Act if:

§ you make the supply for consideration

§ the supply is made in the course or furtherance of an enterprise that you carry on

§ the supply is connected with Australia, and

§ you are 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.

The provisions in Division 40 of the GST Act that relate to input taxed supplies do not apply to the provision of counselling services. It is necessary to consider whether the GST-free provisions in Division 38 of the GST Act apply to counselling services. Of relevance to this case is subsection 38-10(1) of the GST Act.

Subsection 38-10(1) of the GST Act states:

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.

(*Asterisked items are defined in section 195-1 of the GST Act.)

Each of the above elements must be satisfied for the supply to be a GST-free supply of a health service.

The table in subsection 38-10(1) of the GST Act which is referred to in paragraph 38-10(1)(a) of the GST Act is as follows:

To qualify as 'a service of a kind specified in the table' in paragraph 38-10(1)(a) of the GST Act, the service must be the provision of one of those actual services listed in the table and not just something that is similar to one of the services. Support for this argument is found in the table where it lists both 'Audiology' and 'Audiometry' at Item 3. If it were intended that it was sufficient that the supply of a service be similar to one mentioned in the table, one of the terms 'Audiology' or 'Audiometry' would be superfluous. Similarly, there is the inclusion of 'traditional Chinese herbal medicine' under Herbal medicine in Item 8 of the table. One of these terms would be superfluous if the list was not strictly interpreted as the actual service listed in the table.

Counselling services are not listed in the table in subsection 38-10(1) of the GST Act. Therefore, the supply of counselling services, in itself, does not satisfy the requirement in paragraph 38-10(1)(a) of the GST Act. However, the requirement in paragraph 38-10(1)(a) of the GST Act will be satisfied where the supplier is supplying one of the services listed in the table in subsection 38-10(1) of the GST Act and counselling services are a standard technique or a component of the supply of that listed service.

For example, 'Psychology' or 'Social Work' are services listed at Item 16 and Item 21 in the table in subsection 38-10(1) of the GST Act for which counselling services may be considered a standard technique or a component of the supply. Therefore, in the course of supplying psychology or social work services, if a psychologist or social worker supplies counselling as a standard component or technique of those services, paragraph 38-10(1)(a) of the GST Act will be satisfied. However, for the supply of the counselling services to be GST-free under subsection 38-10(1) of the GST Act, paragraphs 38-10(1)(b) and (c) must also be satisfied.

In the present case, the entity is supplying counselling services and is not supplying any of the relevant services listed in the table in subsection 38-10(1) of the GST Act or the GST Regulations. As such, the requirement in paragraph 38-10(1)(a) of the GST Act is not satisfied and the supply is not GST-free under subsection 38-10(1) of the GST Act. Therefore, it is not necessary to discuss the requirements in paragraphs 38-10(1)(b) and (c) of the GST Act.

The entity makes its supply of counselling services for consideration in the course of carrying on its enterprise in Australia. As it is required to be registered for GST, the supply satisfies all the elements of section 9-5 of the GST Act. As the supply is not GST-free under Division 38 of the GST Act or Division 40 of the GST Act, the supply of counselling services is taxable and GST is payable.