Edited version of your written advice

Authorisation Number: 1013140976082

Date of advice: 20 December 2016

Ruling

Subject: GST on medical reports and transference of patient's files

Question 1

Is the supply of a patient's file to another medical practice considered to be a taxable supply?

Answer

Yes, as no Medicare benefit is payable for this service and it is not considered to be an appropriate treatment for the patient.

Question 2

Is the supply of medical reports (such as employments reports and relevant licence verification) to patients considered to be a taxable supply?

Answer

Yes, provided no Medicare benefit is payable and it is not considered to be an appropriate treatment for the patient.

Relevant facts and circumstances

About you

● You are a medical practice providing health care to patients

● You are registered for GST from 1 July 200X on a quarterly basis

Client files from your practice to another practice

● If a patient moves to another practice, a request from the other practice (authorised by the patient) is forwarded to your practice to send a copy of the patient's file. A fee is charged payable by the client and you want to know if GST is added on to this. You charge a flat fee of $X0 for undertaking this service.

● You stated that the files detail the patient's conditions, tests and all notes undertaken by doctors during the time the patient has been a patient of the practice.

● You confirmed that no Medicare benefit is payable for this service.

Medical reports requested by patients

● You supply medical reports such as employment reports (when a patient is applying for a job and they need doctor's verification on the patient's state of health) or for driving tests (when a patient is going for a relevant licence and they need a doctor's verification on the patient's state of health). In relation to employment reports, you said sometimes the employer will pay for it on behalf of the patient or the patient will get reimbursed by the employer.

● Sometimes these reports are supplied to insurance companies and solicitors instead of the actual patients and you charge GST. Generally you charge a flat fee of $XXX/$XXX.

● You confirmed that no Medicare benefit is payable for these report writing services.

Other reports

● You said sometimes reports are provided for determining social security entitlements

● You said there are a number of reports provided as there are so many types of patients. As a result, you wanted an overview on the GST treatment of providing certain reports.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Subsection 7-1(1),

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5,

A New Tax System (Goods and Services Tax) Act 1999 Subsection 9-30(1) ,

A New Tax System (Goods and Services Tax) Act 1999 Section 38-1,

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,

A New Tax System (Goods and Services Tax) Act 1999 Division 38, and

A New Tax System (Goods and Services Tax) Act 1999 Division 40.

Other references

● ATO Health Industry Partnership - issues register available on the ATO website

Reasons for decision

Glossary

All legislative references are to the GST Act unless stated otherwise. Terms with an asterisk are defined in the GST Act.

Question 1

Is the supply of a patient's file to another medical practice considered to be a taxable supply?

Summary

Yes, as no Medicare benefit is payable for this service and it is not considered to be an appropriate treatment for the patient.

Detailed reasoning

When is GST payable

Subsection 7-1(1) states that GST is payable on *taxable supplies.

Section 9-5 lists the four key factors of taxable supplies:

'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.

GST-Free Supplies

Subsection 9-30(1) states that a supply is GST-free if:

(a) it is GST-free under Division 38 or under a provision of another Act; or

(b) it is a supply of a right to receive a supply that would be GST-free under paragraph (a).

It is considered that the provisions of the GST Act which deal with input taxed supplies (which is Division 40) will have no application in this ruling.

Division 38

This division (section 38-1) specifies types of supplies that are GST-free. If a supply is GST-free, then no GST is payable on the supply.

Subdivision 38-B of the GST Act provides that certain goods and services relating to health are GST-free. Of relevance to this case is subsection 38-7(1) of the GST Act.

Subsection 38-7(1) Medical services

This subsection states: a supply of a *medical service is GST-free.

What is a medical service?

Section 195-1 of the GST Act defines "medical service" 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.

Section 1.a 'Medical Services' in the Health Industry Partnership issues register on the ATO website explains these limbs in more detail.

First limb- Medicare benefit is payable

A service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973, is GST-free under the first limb of the definition.

Any service, for which a Medicare benefit is not payable, must be considered under the second limb of the definition.

In your case, you told us that a Medicare benefit is not payable when you supply a patient's file to another practice. Therefore, the first limb of the definition is not satisfied. Consequently, we will concentrate on the second limb of the definition to determine whether you are providing a medical service.

Second limb- Supplied by medical practitioner for appropriate treatment

The second limb of the definition of 'medical service' contains a number of elements. All of these elements must be satisfied before a service will be a medical service under the second limb.

1) Meaning of 'service supplied by or on behalf of a *medical practitioner or *approved pathology practitioner'.

The first element is that the service must be supplied by or on behalf of a *medical practitioner (defined in section 195-1 of the GST Act as a person who is a medical practitioner for the purposes of the Health Insurance Act 1973) or an *approved pathology practitioner (defined in section 195-1 of the GST Act as a person who is a approved pathology practitioner for the purposes of the Health Insurance Act 1973).

The phrase 'on behalf of' for the purposes of the definition of '*medical service' means the performance of a component of the service provided by a practitioner that is not necessarily supervised by that practitioner. An example is where a laboratory technician assists in undertaking pathology testing of specimens. However, 'on behalf of' does not include a service performed on referral by another person. A service performed on referral by another person, is not a component of the supply being provided by the first practitioner. The service being provided by the second person will be a separate supply, the GST-free status of which must be examined by reference to the supply by that second person.

2) Meaning of 'generally accepted in the medical profession as being necessary for the appropriate treatment'.

The second element is that the service supplied must be generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

The above requires interpretation as to what is meant by 'generally accepted' and 'appropriate treatment'.

'Appropriate treatment' will be established where the practitioner assesses the recipient's state of health and determines a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of the recipient and will include subsequent supplies for the assessed process. 'Appropriate treatment' includes the principles of preventative medicine.

In addition, the definition requires the treatment must be generally accepted in the medical profession as being necessary. The particular service being provided by the *medical practitioner or *approved pathology practitioner and the circumstances in which it is provided must be generally accepted by the medical profession. The words 'generally accepted in the medical profession' indicate that it will ultimately be the medical profession that determines what services will be generally accepted.

3) Meaning of 'the *recipient of the supply'.

Section 195-1 defines '*recipient' in relation to a supply to mean the entity to which the supply was made. In some circumstances, the '*recipient of the supply' is not the patient of the practitioner but is a third party such as an employer. 'Appropriate treatment' will not include supplies undertaken for a third party that does not encompass the concept of treatment.

For example, an insurance company is a third party who may be the actual '*recipient of the supply', where an assessment of a person is made for insurance purposes, there is no actual treatment involved and such a supply will be taxable.

In your case it is considered that the supply of a patient's medical records to another practice will not be 'appropriate treatment' as it is not for the purpose of preserving, restoring or improving the physical or psychological wellbeing of the patient. Therefore, the supply of the medical records does not satisfy the second limb of the definition of medical service. As explained above, the first limb of the definition is also not satisfied. This means that the supply of the patient's file to the other practice is a taxable supply under section 9-5.

Question 2

Is the supply of medical reports (such as employments reports and relevant licence verification) to patients considered to be a taxable supply?

Summary

Yes, provided no Medicare benefit is payable and it is not considered to be an appropriate treatment for the patient.

Detailed reasoning

Like in Question 1, we will need to determine whether supplying a medical report is considered to be supplying a medical service.

Applying the two limbs of the definition of a medical service to your case, we can gather that you are not providing a medical service when supplying a medical report since:

● a Medicare benefit is not payable; and,

● you are not providing appropriate treatment to the patient (preserving, restoring or improving the physical or psychological wellbeing of the patient) by issuing them a report.

This means that a supply of a medical report will be considered as a taxable supply under section 9-5.