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Ruling

Subject: GST and the supply of naturopathy and other health services

Question:

Is the entity's supply of naturopathy and other health services GST-free?

Answer:

The entity's supply of naturopathy services is GST-free under subsection 38-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

The entity makes a GST-free supply of other health services under subsection 38-10(1) of the GST Act where they are supplied as a component of its supply of GST-free naturopathy services.

The supply of goods is only GST-free to the extent that the entity supplies them as a component of its supply of GST-free naturopathy services and the goods are completely consumed at the premises in which the entity supplies its naturopathy services.

Relevant facts and circumstances

The entity provides complementary health services.

The entity is a qualified naturopath and is a member of a professional association that has uniform national registration requirements.

The entity assesses a patient's health to address the issues and recommends the appropriate treatment which includes naturopathy and other health services.

The other health services are sometimes supplied on their own and sometimes as a component of the supply of naturopathy services. These other health services are accepted in the naturopathy profession as being necessary for the appropriate treatment of a patient when they are recommended to the patient after the patient's health has been assessed by a naturopath.

The entity also supplies goods in relation to one of the other health services. The goods are partly consumed at the premises in which the entity supplies the naturopathy services and the rest are given to the patient to consume at home.

The entity is registered for 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 Subdivision 38- B

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 subsection 38-10(4)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(4)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(4)(b)

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

Reasons for decision

Subsection 7-1(1) of the GST Act provides that GST is payable on taxable supplies. As such, an entity is liable to pay the GST payable on any taxable supply it makes.

Section 9-5 of the GST Act provides that an entity makes a taxable supply if:

· it makes a supply for consideration

· it makes it in the course or furtherance of an enterprise that it carries on

· the supply is connected with Australia, and

· the entity is 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.

Supply of naturopathy and other health services

The entity makes its supply of naturopathy and other health services for consideration in the course of carrying on its enterprise in Australia and is registered for GST. As such, its supply of these services satisfy the requirements for a taxable supply in section 9-5 of the GST Act and GST is payable.

Subdivision 38-B of the GST Act determines those health services that are GST-free.

Of relevance to this case is subsection 38-10(1) of the GST Act which deals with other health services.

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

A supply is GST-free if: 

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

· the supplier is a *recognised professional in relation to the supply of services of that kind; and

· the supply would generally be accepted, in the profession associated withy 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 requirements in subsection 38-10(1) of the GST Act must be satisfied for the supply of naturopathy and the other health services to be GST-free.

First requirement (paragraph 38-10(1)(a) of the GST Act)

Paragraph 38-10(1)(a) of the GST Act requires that a service must be a 'service of a kind specified in the table'. To qualify, the service must be the provision of one of the actual services listed and not just something similar to one of the services listed.

Naturopathy is specified at item 9 in the table in subsection 38-10(1) of the GST Act (Item 9). Therefore, the entity's supply of naturopathy satisfies the requirement in paragraph 38-10(1)(a) of the GST Act.

The entity also supplies other health services sometimes in their own right and sometimes as a component of its supply of naturopathy services.

The other health services are not listed in the table in subsection 38-10(1) of the GST Act or in the GST Regulations. Therefore, in themselves, they do not satisfy the requirement in paragraph
38-10(1)(a) of the GST Act. As such, the entity's supplies of these services are not GST-free when it supplies them in their own right.

However, where a service is not listed in the table in subsection 38-10(1) of the GST Act, the requirement in paragraph 38-10(1)(a) of the GST Act may still 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 the unlisted service is a standard component or technique of that listed service.

As such, in circumstances when the entity supplies the other health services as components of its supply of naturopathy services which is listed in Item 9, the requirement in paragraph 38-10(1)(a) of the GST Act will be satisfied.

Second requirement (paragraph 38-10(1)(b) of the GST Act)

Paragraph 38-10(1)(b) of the GST Act requires that the services must be supplied by a 'recognised professional' in relation to the supply of those services.

Section 195-1 of the GST Act provides that a person is a 'recognised professional' if the person has either:

· permission, approval or is registered under Australian State or Territory law, in the State or Territory in which the service is supplied, or

· if no such law exists, they are a member of a professional association that has uniform national registration requirements in relation to supplies of services of that kind.

There is no State or Territory law that prohibits a person from supplying naturopathy services without permission, approval or registration. Accordingly, in relation to the supply of naturopathy services, a person is a recognised professional if that person is a member of a professional association that has uniform national registration requirements relating to the supply of naturopathy services.

The entity is a member of a professional association with uniform national registration requirements for the supply of naturopathy services. Therefore, it is a recognised professional in relation to the supply of naturopathy services and the requirement in paragraph 38-10(1)(b) of the GST Act is satisfied.

Third requirement (paragraph 38-10(1)(c) of the GST Act)

Paragraph 38-10(1)(c) of the GST Act requires that the supply must be generally accepted, in the relevant profession, as being necessary for the appropriate treatment of the recipient of the supply.

A health practitioner provides 'appropriate treatment' when they assess a patient's health and determine a course of action to preserve, restore or improve the physical or psychological wellbeing of that patient as far as their training allows.

The treatment is 'appropriate' if it would generally be accepted by the relevant health profession as being appropriate for the patient, including further treatment and the principles of preventative medicine.

From the information provided, the entity's supply of naturopathy services will satisfy the requirement in paragraph 38-10(1)(c) of the GST Act.

For the supply of the other health services to be 'generally accepted', the services supplied and the circumstances in which they are provided, must be generally accepted as being part of naturopathy. In this case, it will be the naturopathy profession that ultimately determines whether the services are generally accepted as being necessary for the appropriate treatment of the patient.

The entity advised that the other health services that it provides are accepted in the naturopathy profession as being necessary for the treatment of a patient when they are recommended by a naturopath after the patient's health has been assessed. After the entity's consultation with the patient, the entity may determine that the appropriate course of treatment for that patient is one of the other health services that it provides or a combination of the health services and sometimes it provides them as part of its naturopathy service.

For paragraph 38-10(1)(c) of the GST Act, it is also necessary to determine who the recipient of the entity's service is.

For GST purposes, section 195-1 of the GST Act defines 'recipient' in relation to a supply to mean the entity to which the supply was made. Sometimes, a health practitioner is contracted by a third party to provide services to a patient. In such cases, the third party may be the recipient of the supply even though the patient is given the actual treatment. Where a third party (rather than a patient) is the recipient of the supply, the supply will not be GST-free under subsection 38-10(1) of the GST Act. However, each case needs to be determined on its own facts and arrangement.

Conclusion

The entity's supply of naturopathy services is GST-free under subsection 38-10(1) of the GST Act.

The entity's supply of other health services is GST-free under subsection 38-10(1) of the GST Act when they are supplied by the entity as a component of its supply of GST-free naturopathy services.

The supply of the other health services, in themselves, is not GST-free under subsection 38-10(1) of the GST Act. It is a taxable supply under section 9-5 of the GST Act.

Supply of goods

The entity also supplies goods in relation to one of the other health services. The goods are partly consumed at the premises in which the entity supplies the naturopathy services and the rest are given to the patient to consume at home.

Subsection 38-10(4) of the GST Act is relevant in this case. It states:

A supply of goods is GST-free if:

(a) it is made to a person in the course of supplying to the person a service referred to in item 8 or 9 of the table in subsection (1); and

(b) it is supplied, and used or consumed, at the premises at which the service is supplied.

The phrase 'it is supplied, and used or consumed, at the premises at which the service has been supplied' as it appears in paragraph 38-10(4)(b) of the GST Act must be read together with the first element in paragraph 38-10(4)(a) of the GST Act. Subsection 38-10(4) of the GST Act relates only to supplies of goods made to a person in the course of supplying herbal medicine or naturopathy services as referred to in items 8 and 9 in the table in subsection 38-10(1) of the GST Act.

It is considered that 'used' in this context means 'completely used or exhausted' at the premises and 'consumed' in this context means 'completely consumed or ingested' at the premises.

If the goods are only partially used or consumed at the premises, it is considered that only that portion used or consumed at the premises will satisfy subsection 38-10(4) of the GST Act.

Consequently, only that part of the goods that is used on the premises at the time of the treatment, when it is supplied as a component of naturopathy services, will be GST-free under subsection
38-10(4) of the GST Act. The goods that the entity supplies to the patient to be consumed off the premises will not be GST-free even when they are supplied as a component of naturopathy services.