Edited version of private advice

Authorisation Number: 1051750462286

Date of advice: 11 September 2020

Ruling

Subject: Goods and services tax and supply of dental services

Question

Is the dental service you supply to a third party clinic GST-free under section 38-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No. The dental service you supply to a third party clinic is not GST-free under section 38-10 of the GST Act because the service you provide is not appropriate treatment of the recipient of the supply.

Relevant facts and circumstances

·   You are registered for GST and you are a recognised dental professional.

·   You have an arrangement with a third party clinic, whereby you provide dental services to their patients at their premises.

·   The patients attend the clinic and the clinic staff processes the relevant administrative requirements.

·   The patients are billed by the clinic under your provider number with all the relevant payments made directly to the clinic.

·   You attend to the patients at the clinic for the relevant booked sessions and provide the relevant services required. The clinic prepares all the materials you require in their premises.

·   The clinic pays you on a per patient basis, including your laboratory bill in relation to each patient, regardless of the number of times you attend to see each patient.

·   You invoice the clinic for your services, including any relevant laboratory expenses. In the event of late payment or non-payment, you will seek payments from the clinic, not the patients.

·   Your arrangement with the clinic is more an understanding with no written agreement entered into.

·   The clinic is not a government entity.

Relevant legislative provisions

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

Reasons for decision

Section 38-10 of the GST Act provides that a supply is GST-free if:

(a)  it is a service of a kind specified in the table in the section, or of a kind specified in the regulations;

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

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

'Dental' service is listed at Item 6 in the table under section 38-10 of the GST Act.

A recognised health professional is a person who is registered, permitted or approved under state or territory laws to provide the listed health service. You have advised that you are a recognised professional in relation to supplying dental services.

Therefore, the first two requirements in section 38-10 of the GST Act (paragraphs (a) and (b) above) are satisfied.

For the third requirement to be satisfied, a health professional is supplying appropriate treatment when they use their professional skills to:

·   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 the practitioner's training allows

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

Appropriate treatment includes preventative medicine and routine check-ups.

The recipient of the supply is whoever engages the health practitioner to provide the service. In many cases, this will be the patient. However, in some cases, it will be a business. For example, some health practitioners enter into arrangements with clinics for providing health services to patients.

If the health clinic engages the health practitioner to provide services to the health clinic's patients, the supply by the health practitioner to the health clinic will not be GST-free under section 38-10 of the GST Act. The services provided to the health clinic cannot be 'appropriate treatment' because the recipient of the supply is not the patient.

In your case, the recipient of your supply is the third party clinic. Therefore, the services you provide to the patients of the clinic cannot be 'appropriate treatment' because the patient is not the recipient of your supply. The supply you make to the third party clinic is not GST-free under section 38-10 of the GST Act.