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Edited version of your private ruling
Authorisation Number: 1012507891261
Ruling
Subject: GST and nutritional supplements dispensed as part of a patient's treatment
Question
Is your supply of nutritional supplements GST-free when they are prescribed and dispensed by you from your medical clinic to patients as part of their treatment?
Answer
Yes.
Relevant facts and circumstances
· You are registered for GST.
· You have received a previous private ruling from us relating to your supply of health services, medicines and nutritional supplements. This ruling is to clarify whether your supply of other types of nutritional supplements to your patients is GST-free.
· From the facts and decisions of the previously ruling, we accept:
o you are providing GST-free health services under subsection 10(1) of A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
o you prescribe and dispense from your medical clinic Chinese herbal medicines, as well as nutritional supplements, to your patients as part of their treatment which they consume away from your medical clinic.
· The nutritional supplements you supply are not exhaustive, that is, you could supply a range of supplements to patients as part of their treatment which they consume away from your medical clinic.
· You prescribe the supplements only with a consultation and by looking at the patient's full medical history, pathology and laboratory results.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
Section 9-5
Subsection 38-10(1)
Subsection 38-10(3).
Reasons for decision
Subsection 38-10(3) of the GST Act provides that a supply of goods is GST-free if:
· it is made to a person in the course of supplying to the person a service the supply of which is GST-free under subsection 38-10(1) of the GST Act (other than a service referred to in item 8, 9, 12 or 15 of the table in subsection 38-10(1) of the GST Act, and
· it is made at the premises at which the service is supplied.
In your case, you are providing a GST-free health service under subsection 10(1) of the GST Act. The health service is not one of the health services listed at item 8, 9, 12 or 15 of the table in subsection 38-10(1) of the GST Act. As part of the treatment, you prescribe and dispense from your medical clinic Chinese herbal medicines and nutritional supplements.
Nutritional supplements
The Health Issues Register which provides the Australian Taxation Office's (ATO) view on this matter (available from the ATO website) requires that the phrase 'in the course of supplying to the person a service' is interpreted to require that the goods (in this case the nutritional supplements) are supplied at the same point in time at which a GST-free health service is supplied. As you prescribe and dispense the supplements from your medical clinic as part of the patient's consultation, this requirement is satisfied.
Furthermore, the supplements must have also been:
· customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free service, or
· necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.
Hence, in those situations where a health practitioner prescribes nutritional supplements for consumption away from their medical clinic (the first dot point above) and they apply their skills and knowledge of medicines when prescribing the supplements for the exclusive treatment of the illness or disability of the patient, the supply of the supplements would be GST-free.
In your case, you prescribe the supplements to patients only with a consultation and by looking at the patient's full medical history, pathology and laboratory results. As a result, you satisfy the first dot point given above and as a consequence, your supply of the supplements would be GST-free under subsection 38-10(3) of the GST Act.
Note that the above reasoning would apply to any nutritional supplement that you may dispense from your medical clinic in the course of treating a patient.