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Edited version of your written advice
Authorisation Number: 1012998781801
Date of advice: 20 April 2016
Ruling
Subject: GST status of money remitted to health practitioners
Question 1
Are the client fees collected by the company, on behalf of health professionals operating from the company's facility under an agreement, subject to GST when the company remits the money to the health professionals?
Answer
No. The money remitted by the company to health professionals operating from its facility under an agreement is not subject to GST because there is no supply associated with the remission of that money.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The company is registered for GST and operates a health facility.
The company enters into an agreement with health professionals who operate from the facility to provide health services to clients.
The health professionals are not employees of the company; they are required to be registered for GST in their own right, either personally or through an associated entity.
Furthermore, pursuant to the agreement, the health professionals are required to maintain their own professional qualifications, registrations, memberships and insurance.
Under the agreement, the company provides each health professional with certain facilities and administrative services which enable the health professional to provide health services to clients. Facilities include: fee collection, offices, reception staff, marketing and other services. The company collects the client fees generated by the health professionals and bank it into its account.
The company does not provide any health services to the clients and the health professionals do not provide any services to the company.
The company charges a fee as consideration for the facilities the company provides to each health professional. The fee is calculated as a percentage of the client payments generated by the health professional for services provided to clients.
The company collects client payment from clients and invoices them on behalf of each health professional.
The fee is calculated (plus GST) and a tax invoice is generated by the company and issued to each health professional.
The net amount of client payments less the fee for facilities is remitted to each health professional.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) makes the supplier liable to pay the GST on any taxable supply they make. Section 9-5 of the GST Act states 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 the indirect tax zone; 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)
In this case, the company supplies certain facilities to a health professional operating from the company's facility, including collection of client payments. Client payments are payments for health services that a health professional supplies to clients. The health professional does not make any supply to the company.
When the company calculates the fee and withholds it from total collected client payments, it will constitute payment for the provision of facilities by the company to the health professional. The company charges GST and invoices the health professional for this supply of facilities.
The remainder (net) of collected client payments which the company remits to the health professional is not payment for any supply that the health professional makes to the company. Therefore, none of the paragraphs in section 9-5 of the GST Act are satisfied and, for that reason, there is no taxable supply. Consequently, as there is no taxable supply in relation to the net amount of fees, there is no requirement to pay GST under section 9-40 of the GST Act.