Edited version of your private ruling

Authorisation Number: 1012300494724

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: GST treatment of medical assessments

Question 1:

Is the supply of medical assessments by you to individual employees a GST-free supply under section 38-7 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer:

No. In the arrangement described where you have an agreement with an employer you are providing a service to the employer, which is a taxable supply.

The service you provide to their employee is not for consideration, and so is not taxable.

Relevant facts and circumstances

You provide a range of medical services to improve health and to educate and encourage healthier lifestyle choices.

These services include you contracting or employing medical practitioners to undertake medical assessments for employees of various organisations or companies.

A Medicare benefit is not payable in relation to the medical assessments.

You contract with relevant employers for the provision of these services to their employees. You have provided an example of an agreement you have entered into with an employer.

Medical assessments are not compulsory for employees, nor are they a condition or requirement of employment with the employer.

Where an employee decides to undertake the medical assessment they initiate the appointment with you directly, and the employee has the choice of which medical practitioner to see.

The employee is provided with the information about their appointment. After the appointment, the employee is provided with the medical report containing the results of the assessment and various recommendations.

The employer normally pays for the medical assessment, but is not provided with any results or the report for the employee. Privacy policies apply and individual assessments are only reported to the individual.

The employer may be provided with a summary report containing aggregated data on its employees collectively. If provided, it does not allow identification of any employees. Where provided, this is normally done so free of charge.

Relevant legislative provisions

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

Section 38-7

Section 9-5

Section 195-1

Reasons for decision

Summary

In the arrangement described you have an agreement with an employer and you are providing a service to the employer. This is a taxable supply.

The service you provide to the client is not for consideration and so is not taxable.

Detailed reasoning

Under section 9-5 of the GST Act you make a taxable supply if you make the supply for consideration, the supply is made in the course or furtherance of your enterprise, 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.

Relevant to your circumstances is section 38-7 of the GST Act. This section provides that a supply of a medical service is GST-free. Medical service is defined in section 195-1 of the GST Act as a service for which a Medicare benefit is payable, 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.

As a Medicare benefit is not payable in your circumstances it is necessary to consider whether the employee is the recipient of the supply. If the employee is not the recipient of the supply it is not possible to meet the requirements of section 38-7 of the GST Act. This is because it is the recipient of the supply that must be treated. The supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. A GST-free supply of a health service cannot be made to a business entity.

We consider that where the employer has an agreement with you, for you to provide a supply to their employees, there is a supply made to the employer (contractual flow) that you provide to the employee (actual flow). We consider that the employer is the recipient of a supply in your circumstances. You enter into a binding agreement or obligation with the employer to act in a certain way towards their employees.

While the employees may or may not take up the offer to engage you, where they do this it is under your arrangements with their employer. You and the employer are then obliged to act in the manner described in your agreement, and it is the employer that has the liability to you rather than the employee. In these circumstances the employer is the recipient of your supply of the service of providing the medical assessments to their employees. They provide consideration for this supply, and it is therefore a taxable supply.

Following the principles in Goods and Services Tax Ruling GSTR 2006/9 that one set of activities may constitute the making of two (or more) supplies, we consider that there is an additional supply to the employee being the supply of the medical services. However, as they do not pay for this supply it is not a taxable supply under ordinary principles.

Where you make a taxable supply to employers you must provide a tax invoice showing the amount of GST in the supply. The employer (as the recipient of the taxable supply in the course of their enterprise) will be entitled to claim an input tax credit for the supply.