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Edited version of your written advice
Authorisation Number: 1013130502416
Date of advice: 31 November 2016
Ruling
Subject: GST supplies and health services
Question 1
Are you making GST-free supplies of health services to your patients?
Answer
Yes, you are making GST-free supplies of health services to your patients.
Question 2
Are you making a taxable supply to a health practice for which GST is payable to the ATO?
Answer
No, you are not making a taxable supply to a health practice.
Relevant facts and circumstances
This ruling is based on the facts stated 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.
You are registered for GST and work on a contract basis providing health services to patients at a specific practice.
The practice collects payments from patients, which it passes on to you after deducting a facility and service fee, for which it provides a tax invoice, and to which it adds GST.
You do not charge the practice any GST, nor provide it any tax invoice, for your services.
The contract states that you engage the practice, and it agrees to provide you with services.
The contract between you and the practice states that the relationship between the parties to the contract is that of principal [you] and service contractor.
The contract summary similarly states that you engage the practice to provide you with services according to the agreed schedule and that the relationship is one of principle (practitioner) and service contractor.
Using the practice's website patients make appointments directly with you.
You determine the fees to be charged, and you have unfettered control and independence over all health decision making.
Under the heading of GST the contract states that if the supply by the practice of its services is a taxable supply you must pay GST on it. No mention is made of any supplies of services by you to the practice.
Reasons for decision
GST-free health services
Health services that are not medical services are GST-free if they are listed in subsection 38-10(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), performed by a recognised health professional and accepted by the health profession as necessary and appropriate to treat the patient or recipient of the service.
Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies examines the meaning of 'supply' in the GST Act. Part 3 of the ruling looks at the meaning of 'supply' in the context of tripartite arrangements.
Proposition 11 (at para 118) makes the statement:
The agreement is the logical starting point when working out the entity making the supply and the recipient of that supply.
In this case, the contract makes it clear that you are the principal, with 'unfettered control and independence over all health decision making' and the practice merely your agent.
Under the contract, the practice is making a supply of administrative services to you and you are supplying health services to patients, which is GST-free.
You are not making any taxable supplies to the practice. Therefore you should not be charging the practice any GST on your income, nor remitting any such GST to the ATO. However, you are able to claim the input tax credits for the payments you make to the practice for its services.