Edited version of your written advice

Authorisation Number: 1051178318683

Date of advice: 10 February 2017

Ruling

Subject: GST and Other Health Services

Questions

1 Which services supplied by the psychologist, trainee social worker, the provisional psychologist, and the naturopath, are GST-free under section 38-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

2 Which goods supplied by the psychologist supplied during the course of supplying their Psychology services are GST-free under subsection 38-10(3) of the GST Act?

3 Which goods supplied by the naturopath during the course of supplying Naturopathy and Herbal medicine services (including traditional Chinese herbal medicine) are GST-free pursuant to subsection 38-10(4) of the GST Act?

Answers

1. Where you supply:

a. Social work services, through the trainee social worker these supplies will not be GST-free as the trainee social worker is not a recognised professional for the purposes of the GST Act.

b. Psychology services through:

i. a recognised professional psychologist, or, through the trainee social workers or provisional psychologists, while they are supervised by the recognised professional psychologist, and

ii. those services are generally accepted in the Psychology profession as being necessary for the appropriate treatment of your clients,

then those services will be GST-free pursuant to subsection 38-10(1).

c Naturopathy services and Herbal medicines in the course of supplying Naturopathy services through:

i. a recognised professional naturopath, and

ii. those services are generally accepted in that profession as being necessary for the appropriate treatment of the recipient of that supply,

then those services will be GST-free pursuant to subsection 38-10(1).

d Chinese Medicine services through:

i. a recognised professional Chinese Medicine practitioner, and

ii. those services are generally accepted in that profession as being necessary for the appropriate treatment of the recipient of that supply,

then those services will be GST-free pursuant to subsection 38-10(1).

e Massage Services through one of the above recognised professionals and those services are generally accepted in that profession as being necessary for the appropriate treatment of your clients then those services will be GST-free pursuant to section 38-10. Otherwise, massage services are taxable.

2 Where the recognised professional psychologist supplies goods during the course of supplying their GST-free service, either directly or through the supervised trainee social workers or provisional psychologists and those supples are made at the premises at which the services are supplied then the supply of those goods will be GST-free pursuant to subsection 38-10(3) of the GST Act.

3 Where the recognised professional naturopath supplies goods including Herbal and Chinese medicines during the course of supplying their GST-free services, and they are supplied and used or consumed at the premises at which the service is supplied, then those goods/medicines will be GST-free pursuant to subsection 38-10(4).

Relevant facts and circumstances

You, are registered for goods and services tax (GST).

You operate a live-in support program from a facility in Australia for clients suffering from medical conditions.

Programs

You provide clients with a choice of various programs of differing lengths.

You supplied a sample copy of one program itemised by session and price which is representative of your programs. Each session name reflects the activities supplied or issues focussed on. The sessions are only indicative as an individual program is prepared for each client after they have been assessed.

During the program sessions of therapy are provided to the clients.

Your employees

You provide your services of Psychology, Naturopathy and Herbal medicine (including traditional Chinese medicine) through a psychologist, a trainee social worker, a provisional psychologist and naturopath. These individuals are employees of yours and supply the relevant services to the recipients of your programs.

The services include one on one treatment sessions, group seminars, education seminars, evidence based individual therapies, massage therapy and the supply of herbal and Chinese medicine.

Social work and Psychology services

The social worker has not yet completed their training.

The psychologist and provisional psychologist are registered with the appropriate body.

The provisional psychologist and the trainee social worker are supervised by the psychologist when they provide Psychology services.

Naturopath

The naturopath is registered with the appropriate body.

Trainee social worker

The social worker is currently not accredited however they currently work under the supervision of the psychologist to provide Psychology services. Their current roles are 'patient support' under the direct supervision of the psychologist as well as following up with patients post treatment.

Assessment and Treatment

Each patient is assessed through a series of phone calls, questionnaires and assessment forms (copies supplied). The assessment is completed in a number of stages.

Each client is assessed upon arrival and the appropriate mix of individual/group sessions are prescribed on a case by case basis. Clients are also assessed throughout their treatment period to measure the effectiveness of the treatment and determine whether the program should be amended. You supplied a copy of a treatment plan which was modified to adapt to the needs of an individual.

Where the naturopaths supply Herbal medicines they are supplied in the course of their treatment of your clients and they are provided and consumed on the premises. They also provide advice on nutrition, Herbal medicine, acupuncture biomes therapy and bio puncture, and education services including lectures, workshops and group activities.

Massage therapy is also a part of the services you supply to your clients.

The naturopath prescribes the Herbal medicines.

This ruling is limited to the supply of treatment, goods supplied as a part of that treatment, and does not deal with the supply of accommodation or meals.

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 38-10, and

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

Reasons for decision

In this reasoning, unless otherwise stated,

● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

● all reference materials referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au

● all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act

Under section 9-5 you make a taxable supply if:

a) you make the supply for consideration

b) the supply is made in the course or furtherance of an enterprise that you carry on

c) the supply is connected with the indirect tax zone (Australia), and

d) you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Your supplies are:

● for consideration

● in the furtherance of your enterprise

● connected with Australia

● you are registered for GST, and

● are not input taxed.

Therefore, your specified supplies will be taxable unless they are GST-free.

GST-free supplies are dealt with in Division 38. Section 38-10 sets out when 'Other Health services' are GST-free and where goods supplied in the course of the supplies of those other services are GST-free.

GST-free services

Subsection 38-10(1) provides, in part, that a supply of health services is GST-free where:

a. it is a service of a kind specified in the table in subsection 38-10(1) (the table)

b. the supplier is a recognised professional in relation to the supply of services of that kind, and

c. the supply is generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient of the supply.

Each of these requirements must be satisfied for the supply of the services through your employees to be GST-free.

GST-free goods

A supply of goods is GST-free pursuant to subsection 38-10(3) where:

a. that supply of goods is made to the person in the course of supplying to the person a service of which is GST-free under subsection 38-10(1) (other than a service referred to in item 8, 9, 12 or 15 of the table in subsection (1), and

b. is made at the premises the service is supplied.

A supply of goods is also GST-free pursuant to subsection 38-10(4) where:

a. that supply of goods is made to the person in the course of supplying to the person a service referred to in item 8 and 9 and

b. it is supplied and used or consumed, at the premises at which the service is supplied.

Are the services of a kind specified in the table? (38-10(1)(a))

The table lists the following services:

Psychology, Naturopathy, Herbal medicine (including traditional Chinese Herbal medicine) and Social work are services that are prescribed in the table. The massage therapy services you supply are not listed in the table. Therefore where you supply Psychology, Naturopathy, Herbal medicine (including traditional Chinese herbal medicine) and Social work services they meet paragraph 38-10(1)(a).

Are your employee's recognised professionals? (38-10 (1) (b))

The term recognised health professional is defined in section 195-1 and relevantly provides that:

recognised professional: a person is a recognised professional, in relation to the supply of a service of a kind specified in the table in subsection 38-10(1), if relevantly:

(a) 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; or

(b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind; or

…

An individual can meet the requirements of the definition of recognised professional under either (a) or (b) in the definition.

Are you a recognised professional?

The ATO has a number of references for various industry groups to assist them with their GST obligations. One of these is the Health Industry Partnership - issues register. (Health Industry Issues Register)

Issue 2.a.11 of the Health Industry Issues Register explains that the requirement under section 38-10 that the supplier of 'other health services' be a recognised professional, is taken to be a requirement that the person who actually performs the 'other health service' must themselves, be a recognised professional in relation to supplying services of that kind.

That is, section 38-10(1)(b) focuses on the professional status of the person performing the 'other health service', and requires that the person performing the 'other health service' be a recognised professional in relation to supplying services of the kind specified in the table in section 38-10.

As you are not a recognised professional, the test is whether your employees are 'recognised professionals'.

Are psychologists recognised professionals?

The psychologist is registered with the appropriate body. Therefore the psychologist is a recognised professional pursuant to paragraph (a) of the definition of recognised professional found in section 195-1.

Trainee social worker and provisional psychologist

The trainee social worker and provisional psychologist are still completing their studies and are both supervised by the psychologist.

While qualified social workers and psychologists are recognised professionals and can satisfy paragraph 38-10(1)(b), the trainee social worker and provisional psychologist cannot in their own right.

The ATO publication, GST and Other Health Services, considers 'What if an assistant provides the service?' It provides the following information:

If part of the health service is performed by an assistant and not the recognised health professional, it is included as part of the GST-free service if all of the following apply:

● it is billed in the name of the recognised health professional and they accept full responsibility for the health service

● it is part of the health service that the recognised health professional provides

● the recognised health professional has been involved in at least part of that health service

● the recognised health professional supervises the assistant directly by

● attending to the patient at the start of each treatment

● being readily available for the whole time the assistant works with the patient

● being available to take appropriate action if there is an emergency

● planning all the treatment the assistant provides

● being able to provide evidence that they monitor the assistant's services.

Therefore, when the trainee social worker and the provisional psychologist provide 'Psychology services' under the supervision of a psychologist and those services meet all the criteria set out above, the ATO considers that the supplies they make, meet the criteria of being supplied by a recognised professional in relation to the supply of Psychology services.

Naturopathy

The naturopath is registered with the appropriate body.

The naturopath is therefore a recognised professional pursuant to paragraph (a) of the definition of recognised professional found in section 195-1 in relation to their supplies of Chinese medicine services.

Issue 2.a.7 of the Health Industry Issues Register asks the question 'What is the ATO's interpretation of '... a professional association that has uniform national registration requirements.' It provides the following answer about a recognised professional:

A number of professional associations have been identified in relation to the supply of services of the kinds listed in the Table in section 38-10(1). These professional associations often require a person to a have a minimum level of educational qualifications (usually tertiary level qualifications) before that person will satisfy the association's requirements for practitioner status. These professional associations are national associations and the registration requirements for practitioner status are the same for all practitioners regardless of the state or territory in which they practice.

The ATO publication 'GST and other health services' provides, in relation to this term that:

A professional association normally has the following characteristics:

● its members practise in the association's listed profession

● it sets its own admission requirements, including acceptable qualifications

● it sets standards of practice and ethical conduct

● it aims to maintain the standing of the profession as a whole, and often prescribes requirements for maintaining its members' professional skills and knowledge through continuing professional development

● it has sufficient membership to be considered representative, but not necessarily solely representative, of the listed profession

● it is a non-profit body

● it has articles of association, by-laws or codes of conduct for its members

● it can impose sanctions on members who break the association's rules.

The naturopath is a 'recognised professional of a professional association that has uniform national registration requirements for the purposes of section 38-10.

Are the supplies generally accepted in the relevant profession? (Subsection 38-10(1)(c ))

Issue 2.a. of the Health Industry Issues Register answers the question 'What is the meaning of 'generally be accepted in the profession associated with supplying services of that kind as being necessary for the appropriate treatment of the *recipient of the supply'..' It provides the following answer about a recognised professional:

It is considered that 'appropriate treatment' will be established where the recognised professional 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 that recipient insofar as that *recognised professional's particular area of training allows and will include subsequent supplies for the determined process.

'Appropriate treatment' includes the principles of preventative medicine. Such treatment must be generally accepted in the profession associated with supplying services of that kind, as being necessary. 'Appropriate treatment' will not include supplies undertaken for a third party, which does not encompass treatment.

The Fact Sheet, GST and Other Health Services, provides the following information in regards to this criterion:

For GST purposes, a recognised health professional provides appropriate treatment if they:

● assess a patient's health

● work out a course of action to preserve, restore or improve the patient's physical or psychological wellbeing as far as their training allows

● supply a treatment that is generally accepted by their profession as being appropriate for the patient.

In your situation you have advised that the psychologist and the naturopath make an assessment of the client's situation and needs and prepare a treatment plan to address the identified needs. You supplied a copy of one of the plans indicating the treatments necessary including the number of sessions and whether the services of the naturopath were needed.

Where the psychologist and the naturopath provide the treatment within the boundaries of their particular profession either in their own right or through the trainee social worker or provisional psychologist and those supplies are generally accepted within their profession as being appropriate for the patient's needs, then they will be GST-free.

Group sessions

Sometimes you conduct group therapy sessions for a number of the clients at the same time in a group session. The ATO considered this issue in ATO Interpretative Decision 2001/390 which provides that where the group therapy is an appropriate treatment for each of those patients and a recognised professional has assessed the individual patient as needing that service in the course of their treatment that supply will be GST-free.

Where the session is a general information session then that service will not be GST-free.

Massage services

You also supply a massage therapy service to your clients. Massage therapy is not one of the listed health services in the table in section 38-10.

The publication GST and Other Health Services provides that where:

● you supply it as part of a listed complementary health service

● you are a recognised professional in one of the listed complementary health services who is also trained in massage therapy

● the listed complementary health service profession considers the massage to be a standard technique or component treatment for that listed complementary health service, and

● the listed complementary health service profession accepts it as being necessary for the appropriate treatment of the patient;

then that supply will be GST-free.

Where it is separate from the complementary health service, the massage therapy session will not be GST-free.

Herbal medicine

Subsection 38-10(4) relevantly provides that a supply of goods that is made to a person in the course of supplying to the person a service referred to in Item 8 (Herbal medicine) or Item 9 (Naturopathy) of the table in subsection 38-10(1) and it is supplied and used or consumed at the premises at which the service is supplied will be GST-free.