GST issues registers
Insurance industry partnership9 Medical expenses
Issue
Subdivision 38-B covers GST-free medical supplies. Basically medical expenses appear to be taxable rather than GST-free where the treatment is not appropriate for the 'recipient of the supply' [s38-10(1)(c)] Normally would expect that the patient was the recipient of the supply and any arrangements by which an insurer pays the claim (for example, CTP or workers compensation) would only be a payment arrangement and not a supply. Are there any circumstances where the supply of medical services that are otherwise GST-free are taxable to the insurer?
For source of ATO view, refer to GSTR 2006/10 Goods and services tax: insurance settlements and entitlement to input tax credits.
ATO view
New Section 38-60, which applies on or after 1 July 2012, ensures that certain supplies made to insurers in settling insurance claims under both private health insurance policies and taxable insurance policies are GST-free to the extent that the underlying supply to the insured (policy holder or third party) is GST-free under Subdivision 38 B.
Section 38-60 similarly provides that supplies made to a statutory compensation scheme operator or compulsory third party (CTP) scheme operator are GST-free to the extent that the underlying supply of health related goods or services to an individual is GST-free under Subdivision 38 B.
Also, certain supplies made by health care providers to Commonwealth, State or Territory government entities are GST-free to the extent that the underlying supply of goods or services to an individual is GST-free under Subdivision 38 B.
However, a supply is not GST-free (to any extent) under Section 38-60 if the supplier and the recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.
See also:
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- GSTR 2006/10 Goods and services tax: insurance settlements and entitlement to input tax credits
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