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Ruling
Subject: GST and hypnotherapy services
Question
Is goods and services tax (GST) payable on the hypnotherapy services provided by you?
Decision
Yes, GST is payable on the hypnotherapy services provided by you.
Relevant facts and circumstances
• You provide hypnotherapy services to clients who suffer from depression, anxiety, phobia, disease, etc. You hypnotise your clients and make them look at the positive side of life and try to cure their problems.
• You are registered for GST.
• At present, you charge GST on your services. You are aware of persons who provide psychology and hypnotherapy services without charging GST. You want to know whether you can provide similar services without charging GST.
• You are not a qualified medical practitioner, an approved pathology practitioner or a psychologist. You are a hypnotherapist. You have completed a course conducted by the Australian Hypnosis Association. You are a member of the Professional Hypnotherapy Association of Australia and you are registered in the Australian Hypnotherapy Register.
• There is no Medicare benefits payable under the Health Insurance Act 1973 for your services. Some private medical insurance funds refund a part of your fees and others do not.
• You are neither a medical practitioner nor an approved pathology practitioner, nor do you supply your services on behalf of a medical practitioner or an approved pathology practitioner.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 - section 9-5
A New Tax System (Goods and Services Tax) Act 1999 - section 38-7
A New Tax System (Goods and Services Tax) Act 1999 - section 38-10
A New Tax System (Goods and Services Tax) Act 1999 - section 195-1
Reasons for the decision
GST is payable on taxable supplies. You must pay the GST payable on any taxable supply that you make.
Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that:
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.
*Denotes a term defined in section 195-1 of the GST Act.
You supply hypnotherapy services for consideration. You make that supply in the course or furtherance of carrying on your enterprise of supplying hypnotherapy services. The supply is connected with Australia as the services are performed in Australia. You are registered for GST. Therefore, your services satisfy paragraphs 9-5(a) - (d) of the GST Act.
The supply of hypnotherapy services is not an input taxed supply under any provision of the GST Act. However, it is necessary to ascertain whether it is a GST-free supply under any provision of the GST Act.
Subsection 38-7(1) of the GST Act provides that a supply of a medical service is GST-free.
A 'medical service' is defined under section 195-1 of the GST Act as:
(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.
In your case, there is no Medicare benefits payable under the Health Insurance Act 1973 for your services. As such, for the supply of your services to be GST-free, it must satisfy the second limb of the definition of 'medical service'. A part of that definition requires that the service be supplied by or on behalf of a medical practitioner or approved pathology practitioner.
The terms 'medical practitioner' and 'approved pathology practitioner' are separately defined under section 195-1 of the GST Act to mean a person who is, for the purposes of the Health Insurance Act 1973, a medical practitioner or an approved pathology practitioner.
You are neither a medical practitioner nor an approved pathology practitioner, nor do you supply your services on behalf of a medical practitioner or an approved pathology practitioner. Therefore, the services you supply are not GST-free medical services under subsection 38-7(1) of the GST Act.
Under subsection 38-10(1) of the GST Act, an entity makes a GST-free supply of other health services 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 the services of that kind; and
(c) the supply would generally be accepted in the profession associated with supplying the services of that kind, as being necessary for the appropriate treatment of the *recipient of the supply.
To qualify as 'other health services', the service must be one of the actual health services listed in the table in subsection 38-10(1) of the GST Act and not just similar to one of those services. The supply of hypnotherapy services is not listed in the table in subsection 38-10(1) or the regulations of the GST Act.
The Goods and Services Tax Industry Issues - Health Industry Partnership has listed the issue 'Is the service of a hypnotherapist GST-free?' It is a public ruling for the purposes of the Taxation Administration Act 1953. Paragraphs 1-5 of the issue are quoted below.
1. This question focuses on the requirement of 'services of a kind' in relation to those services listed in section 38-10(1)(a) and the definition of *recognised professional.
Services of a kind
2. Hypnotherapy is not a service of a kind specified in the Table for section 38-10(1)(a). However, hypnotherapy may be considered to be a technique of one or more of the services listed in that Table.
3. If the hypnotherapy is supplied by a recognised professional in relation to one of the listed services in the Table (for example a psychologist), and it is generally accepted in that profession as being necessary for the appropriate treatment of the recipient of the supply then it will be GST-free.
Recognised professional
4. Paragraph (a) of the definition of '*recognised professional' in section 195-1 provides that a person is a recognised professional in relation to the supply of the service of a kind specified in the Table if the service is supplied in a state or territory in which the person has a permission or approval, or is registered, under a state law or a territory law prohibiting the supply of services of that kind without such permission, approval or registration. It is considered that 'prohibiting' includes a law which does not allow a person to hold themselves out as a provider of certain services as governed by that relevant law.
5. Hypnotherapy, or the use of hypnosis, is restricted under some state acts dealing with 'Psychology' (Item 16 of the Table) and a practitioner must be registered under that state act. However, registration for the provision of hypnosis will not entitle that person to hold themselves out as a practitioner of psychology. Accordingly, registration for hypnosis under a state act will not, by itself, satisfy the requirements that the supply is of psychology or that the person is a recognised professional for the supply of psychology.
In your case, as you are not providing hypnotherapy services as a psychologist or as one of the recognised professional services 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 is not satisfied. As such, your hypnotherapy services are not GST-free supplies. Accordingly, under section 9-5 of the GST Act, your services are taxable supplies and GST is payable on those services. You are required to remit to the ATO, GST amounts equal to 1/11th of the fees that you receive from your clients.