Edited version of your written advice

Authorisation Number: 1013009009446

Date of advice: 9 May 2016

Ruling

Subject: GST and medical services

Question

Is the supply of your services, which form part of a medical procedure, GST-free under subsection 38-7(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. The supply of your services, which form part of a medical procedure, is not GST-free under subsection 38-7(1) of the GST Act. The supply of your services is a taxable supply.

Relevant facts and circumstances

You are an Australian resident for income tax purposes.

You are registered for GST.

You provide services that form part of a medical procedure.

A patient consults a medical practitioner for assessment and, if appropriate, the medical procedure is recommended. If a patient contacts you directly, the patient is advised to consult a medical practitioner.

When the patient agrees to the medical procedure, the medical practitioner sends you a form.

Your services are carried out in your premises by scientists employed by you.

You are fully responsible for the quality of the product of your services, with a representative often attending the rest of the medical procedure.

You invoice:

• the patient (if self-funded); or

• the hospital (if the patient is covered by the public health system); or

• the insurer (if the procedure is related to workers compensation).

You do not invoice the medical practitioner/surgeon for your services.

Your services are not billed by the medical practitioner/surgeon, in their own name, as part of their supply of medical service to the patient.

You do not a have a written agreement with the patient or the medical practitioner as regards the supply of your services.

You do not have an agreement or a pre-existing arrangement with the hospital or the insurer

Your services and research activities are conducted in compliance with all National Health and Medical Research Council (NHMRC) mandated legislation and guidelines such as the National Statement on Ethical Conduct in Human Research and the Australian Privacy Principles that apply to health care service providers.

You have received ethical and governance approval from NHMRC accredited bodies for all clinical research projects associated with your services.

A wide range of registered medical practitioners in multiple state of Australia have adopted and recommend the medical procedure.

The medical procedure is widely accepted in Australia and internationally as a standard surgical technique for the treatment of an illness.

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 subsection 38-7(1)

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

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

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 under section 195-1 of the GST Act).

What is supplied?

In determining whether the requirements of section 9-5 of the GST Act are satisfied, we must identify what is supplied by you.

Based on the information provided, the medical practitioner/surgeon provides treatment (medical service) to patients.

The medical practitioner assesses the patient and, if appropriate, recommends the medical procedure as a form of treatment. The medical procedure has three phases.

Your role in the medical procedure is to undertake one of the phases. Therefore, what you supply is your services in relation to one phase of the medical procedure.

Taxable Supply

You supply your services for consideration and in the course of carrying on your enterprise. The supply is connected with the indirect tax zone and you are registered for GST. Thus, the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied. Accordingly, the supply of your services is a taxable supply unless the supply is GST-free or input taxed.

There is no provision in the GST Act under which the supply of your services would be input taxed. Therefore, what remains to be determined is whether the supply would be GST-free.

GST-free supply

Subsection 38-7(1) of the GST Act provides that a supply of a medical service is GST-free. 'Medical service' is defined in section 195-1 to mean:

(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

Medicare benefits are not payable for your service; thus, your service is not a medical service under paragraph (a) above.

For the purpose of paragraph (b), the phrase 'on behalf of' means the performance of a component of the service provided by a practitioner that is not necessarily supervised by that practitioner. Generally, this requires that:

• the services are billed in the name of the practitioner, being the supplier of the medical service; and

• the practitioner accepts full responsibility for the actions of the other entity supplying the component of the medical service.

You advised that your services are not billed by the medical practitioner in their own name. While you are fully responsible for the quality of the product you deliver, you did not advise that the medical practitioner accepts full responsibility for your actions. Rather, you advised that the medical practitioner would accept full responsibility for adhering to standard procedures required for any surgery.

When the patient agrees to the treatment, the medical practitioner sends a form to you. You submitted that the form is a request for your service. However, we note that the form (a copy of which we have obtained online) does not contain any information that would indicate a contractual relationship between you and the medical practitioner.

You further advised that your services are actually performed by scientists employed by you. However, you did not advise whether your services are performed under the supervision or direction of your own medical practitioner or approved pathologist, if you have any.

Based on the information above, our view is that you do not supply your service on behalf of the medical practitioner. While your services are part of the medical procedure, you supply your services to the patient in your own right rather than on behalf of the medical practitioner.

Furthermore, you do not supply your services as a medical practitioner. As such, the supply of your services is not a supply of a medical service for GST purposes and would not be GST-free under subsection 38-7(1) of the GST Act

Accordingly, the supply of your services is a taxable supply.