Edited version of private advice

Authorisation Number: 1051750555075

Date of advice: 9 September 2020

Ruling

Subject: GST and exercise physiology services

Question

Do you need to charge GST on your exercise physiology services?

Answer

Yes, you are required to charge GST on your exercise physiology services except the services you provide on referrals from medical Doctors where medicare benefits are payable.

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are an Exercise Physiologist qualified with a Bachelor of Science majoring in Sport & Exercise.

You are currently registered for GST.

You provide your services to the following 3 categories of clients:

1.    clients on Doctors' referrals or private referrals where fees are payable by organisations such as Department of Veterans Affairs, National Disability Insurance Scheme and My Aged Care under the relevant schemes within these organisations. There are no medicare benefits payable under these arrangements;

2.    clients referred by medical Doctors where medicare benefits are payable for your services under a bulk billing arrangement. The medicare benefits are payable under medicare item 19053 within the 'Allied Health Services' group;

3.    walk-in clients who pay for the services by themselves or through their private insurance providers. No medicare benefits are payable in these arrangements.

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 38-7

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

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

Reasons for decision

In providing your exercise physiology services, you are making a supply for GST purposes. Therefore, you need to charge GST on your exercise physiology services if the supply you make is a taxable supply.

In considering whether a supply is a taxable supply, regard must be given to section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) which states:

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 Australia; 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.

In your case, your supply of the exercise physiology services satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act, therefore your supply will be a taxable supply unless it is GST-free or input taxed under other provisions of the GST Act.

The supply of exercise physiology services is not input taxed under any provisions of the GST Act or any other Act. Therefore, what is left to be considered is whether the supply of the exercise physiology services is GST-free.

Division 38 of the GST Act provides that certain supplies relating to health are GST-free. In your case, the relevant provisions to examine are section 38-7 and section 38-10 of the GST Act.

Medical services

Section 38-7 of the GST Act provides that a supply of a medical service is GST-free. The term medical service is defined in section 195-1 of the GST Act to mean:

(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.

The definition of a medical service has two limbs. The supply of a medical service that falls within either the first or the second limb of the definition in section 195-1 of the GST Act is GST-free. The first limb merely requires that the supply is one for which the specified medicare benefit is payable. Unlike the second limb, the supply does not have to be made by a medical practitioner or an approved pathology practitioner (as defined in section 195-1 of the GST Act). The second limb addresses services for which a medicare benefit is not payable.

In your case, when clients are referred by medical Doctors to seek your services and medicare benefits are payable for your services under medicare item 19053 within the 'Allied Health Services' group, your supply of the exercise physiology services will be a supply of medical service as it falls within the first limb of the medical service definition in section 195-1 of the GST Act. As result your supply under such arrangements will be GST-free pursuant to Section 38-7 of the GST Act.

For the very same reason, your supply of exercise physiology services will not be a medical service under the first limb of the medical service definition in section 195-1 of the GST Act when no medicare benefits are payable for the services.

This means:

·         Your supply of services to clients on Doctors' referrals or private referrals where fees are payable by organisations such as Department of Veterans Affairs, National Disability Insurance Scheme and My Aged Care under the relevant schemes within these organisations will not be medical service;

·         Your supply of services to walk-in clients who pay for the services by themselves or through their private insurance providers with no medicare benefits are payable will not be medical service.

For completeness, under the second limb in paragraph (b) of the definition of a medical service in section 195-1 of the GST Act, only those services supplied by or on behalf of a medical practitioner or approved pathology practitioner will qualify as a medical service.

In your case, you are not a medical practitioner or approved pathology practitioner, and the phrase on behalf of does not include a service performed as a result of referral by a medical practitioner or approved pathology practitioner. A service performed as a result of referral by another person, is not a component of the supply being provided by the first practitioner. It is a separate service, the GST status of which must be considered independently.

Based on this, your supply of exercise physiology services will not be a medical service under the second limb of the medical service definition in section 195-1 of the GST Act.

Other health services

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

(a) it is a service of a kind specified in the table in this subsection or of a kind specified in the regulations; 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 the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

All three requirements in subsection 38-10(1) of the GST Act must be satisfied for a supply of health services to be GST-free under that subsection.

However, as exercise physiology is not a listed health service it is not GST-free under 'other health service' provisions. Therefore, where exercise physiologist is providing services for which no Medicare benefit is payable, the services would not be GST-free.