Edited version of your written advice

Authorisation Number: 1051349852830

Date of advice: 19 March 2018

Ruling

Subject: GST and psychology services

Question

Are your supplies of psychology services GST-free, when you invoice a private clinic for your services?

Answer

No. You are making a taxable supply when you invoice a private clinic for your psychology services.

Relevant facts and circumstances

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

● You are a psychologist registered through the Australian Health Practitioners Regulation Agency (AHPRA) via the Psychology Board of Australia.

● You provide psychology services at a private clinic.

● You invoice the private clinic for your psychology services, not the patients.

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 9-40

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-10(1)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(1)(c)

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

Reasons for decision

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are liable for GST on any taxable supplies that you make.

Section 9-5 of the GST Act provides you make a taxable supply if:

● you make the supply for consideration

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

● the supply is connected with the indirect tax zone, and

● 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.

In your case, the services you provide are for consideration, they are in the course of your practice of psychology and you are registered for GST. Therefore, your supplies will be taxable supplies unless they are either input taxed or GST-free. There is no provision in the GST Act under which your supply of psychology services is input taxed.

Accordingly what is left to be determined is whether the supply of your services is GST-free.

Psychology Services

Subsection 38-10(1) of the GST Act provides that a supply of other health services is GST-free if:

(a) it is a service of a kind specified in the table in subsection 38-10(1) of the GST Act; and

(b) the supplier is a recognised professional in relation to the supply of services of that kind; and

(c) the supply would generally be accepted, in that profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

For the purposes of paragraph 38-10(1)(a) of the GST Act, the service must be of a kind specified in the table in the subsection. Psychology services are listed at item 16 of the table contained in subsection 38-10(1) of the GST Act.

For the purposes of paragraph 38-10(1)(b) of the GST Act, a recognised professional must provide the service.

Section 195-1 of the GST Act provides that a person is a recognised professional, in relation to a supply of services of a kind specified in subsection 38-10(1) of the GST Act (psychology services), if:

'(a) the service is supplied in a State or Territory in which the person has 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'.

A person practicing in psychology is a 'recognised professional' if they are registered under a State or Territory law prohibiting the supply of psychology services without such registration. You are registered as a psychologist by State law. As such, you are a recognised professional under paragraph 38-10(1)(b) of the GST Act.

For the purposes of paragraph 38-10(1)(c) of the GST Act, the psychologist must provide the service, and the psychology profession would need to consider the service as being necessary for the appropriate treatment of the recipient of the supply.

The other requirement in paragraph 38-10(1)(c) of the GST Act is that there be appropriate treatment of the 'recipient of the supply'. Therefore, it is necessary to determine who the recipient of your supply is.

Recipient of the supply

Generally, in relation to the supply of health services under the GST Act, the supply is only GST-free where an individual receiving that service or specific health treatment is the recipient of that supply. This outcome results from the specific wording in some health provisions, whilst in other provisions it is due to the nature of the services themselves.

The GST Act defines 'recipient' in relation to a supply to mean the entity to which the supply was made.

As you are contracted by a third party (the private clinic) to provide psychology services to a patient then the third party is considered to be the recipient of your supply, even though the patient is given the actual treatment.

As the recipient of your supply is the private clinic, your supply to them does not involve an ‘appropriate treatment of the recipient of the supply’. Therefore, your supply of psychology services to the private clinic is not GST-free under section 38-10 of the GST Act.

As you satisfy the requirements of section 9-5 of the GST Act you are making a taxable supply when you invoice the private clinic for your psychology services.