Edited version of your written advice

Authorisation Number: 1051453114247

Date of advice: 9 November 2018

Ruling

Subject: GST and counselling services

Question

Are your supplies of counselling services GST-free under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Your supplies of counselling services (excluding services supplied to participants in the National Disability Insurance Scheme [NDIS]) are not GST-free under the GST Act. This applies regardless of whether those services are:

● provided to/paid for clients directly

● provided to clients but paid for by Department A, or

● provided to clients but paid for by Department B.

If you are registered, or required to be registered for GST, these supplies will be taxable supplies under section 9-5 of the GST Act.

Your supplies of counselling services to clients who are participants in the NDIS are GST-free under section 38-38 of the GST Act, only where all of the following requirements are met:

● the participant has a plan in effect,

● the supply is of reasonable and necessary supports that are specified in the statement of supports in the participant's plan,

● there is a written agreement between the supplier and the participant (or another person), and

● the supplies are of a kind determined in a legislative instrument by the Minister responsible for Disability Services.

The scheme commences on:

September 2018

Relevant facts and circumstances

● You are a self-employed therapist specialising in trauma.

● You are not currently registered for goods and services tax (GST).

● You have an undergraduate degree in counselling and are currently completing a Masters in mental health practice.

● You are not a registered psychologist or social worker.

● Your field of work covers two areas:

1) you provide counselling and psychotherapy to patients that have been subjected to abuse, and

2) you work with clients that have a particular disorder

You currently receive income from the following sources:

1) directly from clients who are privately funded

2) from clients who are participants in the National Disability Insurance Scheme (NDIS)

3) from Department A, and

4) from Department B.

Income through NDIS

You provide services pursuant to the standard service agreement that the NDIS gives to its services providers.

Income from Department A

● Department A allocates patients that have experienced abuse to you for treatment, because you specialise in trauma and a particular disorder.

● You invoice Department A each month for the therapy sessions that you provide to those children.

● You believe that your services are covered by the GST exemption for psychology but would like formal confirmation before you reach the GST threshold.

Relevant legislative provisions

Section 9-5 and Division 38 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision

There are several GST exemptions for health services found in Division 38 of the GST Act. Those that could potentially be of relevance to your circumstances are:

● GST-free ‘other health services’ (subsection 38-10(1)

● GST-free ‘other government funded health services’ (section 38-15)

● GST-free ‘disability support provided to NDIS participants’ (section 38-38), or

● GST-free ‘third party procured GST-free health supplies’ (section 38-60).

GST-free ‘other health services’

Supplies of health services are GST-free under section 38-10 if the GST Act if the services are:

● listed in the GST Act (listed in the table in subsection 38-10(1)

● performed by a recognised health professional in relation to the supply of services of that kind, and

● accepted in the relevant health profession as necessary for the appropriate treatment of the recipient of the supply.

The listed health services that can be GST-free under this exemption are:

● an Aboriginal or Torres Strait Islander health service

● acupuncture

● audiology or audiometry

● chiropody

● chiropractic

● dental

● dietary

● herbal medicine (including traditional Chinese herbal medicine)

● naturopathy

● nursing

● occupational therapy

● optometry

● osteopathy

● paramedical

● pharmacy

● psychology

● physiotherapy

● podiatry

● speech pathology

● speech therapy

● social work.

To be GST-free under this exemption, the service must be one of the listed services and cannot just be similar to one of these services. Also, the recognised professional performing the service must be a recognised professional in relation to the services that are specifically listed.

‘Counselling’ is not a service that is specifically listed in the GST Act in its own right. As such, counselling services supplied by a recognised professional in counselling, are not GST-free. In contrast however, where counselling services are supplied as part of a supply of ’psychology’, by a recognised professional in relation to psychology, then those counselling services would be a GST-free supply of psychology (provided that the supply is generally accepted in the psychology profession as being necessary for the appropriate treatment of the recipient of the supply).

GST-free ‘other government funded health services’

To qualify for a GST exemption under this category, the requirements are:

● the health service supplied is in connection with a GST-free supply of a medical service or ‘other health service’

● the supplier receives funding from the Commonwealth, State or Territory in connection with the supply, and

● the supply is covered by the Health Minister’s determination.

This exemption requires the supplier to be the recipient of the government funding. From the facts provided, you do not receive any government funding yourself; rather it is your clients who are directly funded. This exemption also requires that the service is connected with a GST-free supply of a ‘medical service’ or ‘other health service’. For the reasons above, counselling services are not a GST-free ‘medical service’ or ‘other health service’.

GST-free ‘disability support provided to NDIS participants’

Supplies to people who receive NDIS funds are GST-free under section 38-38 of the GST Act if the following conditions are met:

● the participant has a plan in effect

● the supply is of reasonable and necessary supports that are specified in the statement of supports in the participant's plan

● there is a written agreement between the supplier and the participant (or another person), and

● the supplies are of a kind determined in a legislative instrument by the Disability Services Minister. The relevant legislative instrument is called the GST-free Supply (National Disability Insurance Scheme Supports) Determination 2017.

Supplies listed in Schedules 1 or 2 of that legislative instrument are GST-free provided the other requirements listed above are met (i.e. plan, written agreement etc). In the case of Schedule 2 supplies, they must also be listed in one of the other determinations named in that Schedule 2—Supplies of supports that are GST-free if they are listed in other determinations*

Schedule 1—Supplies of supports that are GST-free*

 *subject to meeting the requirements set out in paragraph 4 of this Determination

Schedule 2—Supplies of supports that are GST-free if they are listed in other determinations*

*subject to meeting the requirements set out in paragraph 5 of this Determination

Counselling services would be covered by Item 4 in Schedule 2 above. Counselling is also listed in one of the other named instruments (see Item 18 in Schedule 1 to the GST-free Supply (Care) Determination 2017). Therefore, to the extent that your supplies meet the other requirements of section 38-38 listed above, those supplies are GST-free.

GST-free ‘third party procured GST-free health supplies’

This GST exemption provides that if a supply (the underlying supply) by a health care provider to an individual (the patient) is either wholly or partly GST-free under Division 38, then a supply of the service of making the underlying supply by the health care provider to an Australian government agency is GST-free to the same extent as the underlying supply.

For the reasons expressed earlier, the underlying supply that you are making is not a GST-free supply. Accordingly any additional related supply that you may make to an Australian government agency (either Department A or B) cannot be GST-free under this exemption.