Private ruling: GST and Podiatry Services
Published: January 2015

Ruling: Q1: Is the provision of Podiatry services to low care patients in a Residential Aged Care Facility GST-free where the services are paid for by the patient? | A1: Yes , the provision of Podiatry services to low care patients in a Residential Aged Care Facility is GST-free where the services are paid for by the patient. | Q2: Is the provision of podiatry services to high care patients with a referral from a medical practitioner GST-free where the services are covered by Medicare ? | A2: Yes, the provision of podiatry services to high care patients with a referral from a medical practitioner is GST-free where the services are covered by Medicare. | Q3: Is the provision of Podiatry services to high care patients in a Residential Aged Care Facility GST-free where the Aged Care Facility is billed for the services? | A3: No, the provision of Podiatry services to high care patients in a Residential Aged Care Facility is not GST-free where the Aged Care Facility is billed for the services.

Relevant facts and circumstances: You are a Health practice specialising in the provision of Health services including podiatry. Podiatrists practicing in your State are required to be registered with a particular Practitioner Regulation Agency. Your employees are registered with this Agency. The podiatry services by you through the podiatrists who are your employees, are to both a low care and high care patients in a Residential Aged Care Facility. These services are herein referred to as podiatry services that you supply. The podiatry services you supply are necessary for the appropriate treatment of patients. Your billing processes for podiatry services fall within the legislative requirements of the Aged Care Act 1997. In the case of low care patients, the bill for podiatry services is passed on to the patient, through the aged care facility. In this instance, although the residential aged care facility receives an itemised invoice, the amount must be agreed beforehand with the care recipient (that is the patient) and the invoices are paid by the patient in accordance with the Aged Care Act 1997 . You offer two billing options relating to high care patients: the first is an hourly rate and the second is an itemised invoice per podiatry service completed. Both options are paid by the residential aged care facility. In the case of high care patients, where there is a referral from a medical practitioner, the podiatry service is bulk billed under Medicare. Where there is no referral the aged care facility is billed. In the case where the aged care facility is billed, the Explanatory Statement to the Quality of Care Principles 2014 provides that an approved provider must not charge the care recipient an additional amount over and above the maximum daily amount of resident fees, for the care and services specified in Schedule 1 where the care recipient has a high level respite care classification level. Therefore in this scenario the patient does not pay any extra money for podiatry services. The funds for these services come from any monies that the patient has already paid to the aged care facility.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act): Section 9-5 | Section 38-7 | Section 38-10 | Section 195-1 | Aged Care Act 1997 Section 96-1 | Explanatory Statement

Reasons for decision: Summary: Podiatry services you supply are GST-free under section 38-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where certain conditions are satisfied. Subsection 38-10(1) of the GST Act states: (1) A supply 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. (Terms marked with an asterisk (*) are defined terms in section 195-1 of the GST Act). Item 18 of the table included in subsection 38-10(1) of the GST Act lists podiatry therefore paragraph 38-10 (1)(a) is met. Further, section 195-1 of the GST Act provides that the person supplying the service is a recognised professional when the service is supplied in a State or Territory in which the person has a permission or approval, or is registered under State or Territory law. Your podiatrists are registered with the Australian Health Practitioner Regulation Agency; therefore paragraph 38-10(1)(b) is met. The supply of the podiatry services will meet paragraph 38-10(1)(c) of the GST Act, if it is necessary for the appropriate treatment of the recipient of the supply. In this regard, it is necessary to determine who the recipient of your podiatry services is. According to section 195-1 of the GST Act, the term ' recipient of the supply' refers to the entity to which the supply was made. Section 96-1 of the Aged Care Act 1997 (the Act) allows the Minister for Social Services to make Principles known as the Quality of Care Principles 2014 (the Principles). Schedule 1 of the Principles lists care and services to be provided for all residential care recipients who need them. Part 3 of the schedule lists services which may incur extra fees. Podiatry is included in Schedule 1 Part 3 of the Principles . The Explanatory Statement to the Principles states: Any additional amount charged for care and services listed in listed in Part 3 must be agreed beforehand with the care recipient and the care recipient must be given an itemised account of the care and services, as required by paragraph 56-1(e) of the Act. You have stated that although the residential aged care facility receives an itemised invoice, the invoices are paid by the patient in accordance with the Aged Care Act 1997 . As the amount must be agreed beforehand with the care recipient (that is the patient), we are of the view that in this scenario that you have entered into a contractual obligation to provide your services to the patient (who also has a liability to pay for your podiatry services). On this basis, we are of the view that the recipient of your services is the patient. Accordingly, as the podiatry services you provide are necessary for the appropriate treatment of patients, paragraph 38-10(c) of the GST Act is met. As each of the conditions in subsection 38-10(1) of the GST Act have been satisfied, the podiatry services you perform for low level care patients who pay for your services at the residential aged care facility are GST-free. Section 38-7 of the GST Act states: (1) A supply of a *medical service is GST-free. (2) However, a supply of a *medical service is not GST-free under subsection (1) if: (a) it is a supply of a *professional service rendered in prescribed circumstances within the meaning of regulation 14 of the Health Insurance Regulations made under the Health Insurance Act 1973 (other than the prescribed circumstances set out in regulations 14(2)(ea), (f) and (g)); or (b) it is rendered for cosmetic reasons and is not a *professional service for which medicare benefit is payable under Part II of the Health Insurance Act 1973. (3) A supply of goods is GST-free if: (c) it is made to an individual in the course of supplying to him or her a *medical service the supply of which is GST-free; and (d) it is made at the premises at which the medical service is supplied. Section 195-1 of the GST Act provides the definition for medical service. It states: medical service means: (a) a service for which a 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. Accordingly, your podiatry services provided to high care aged care residents with a referral from a medical practitioner for which a Medicare benefit is payable meets subsection 38-7(1) of the GST Act. Therefore, this service is GST-free. The relevant subsection of the GST Act to consider here is subsection 38-10(1) of the GST Act, as quoted in Question 1. In this scenario your services meet the requirements of paragraphs 38-10(1)(a) and 38-10(1)(b). What needs to be determined is whether you are supplying appropriate treatment to the recipient of the supply as stated in paragraph 38-10(1)(c). In this regard it is necessary to determine who the recipient of the supply is. The Explanatory Statement to the Principles provides that an approved provider must not charge the care recipient an additional amount over and above the maximum daily amount of resident fees, for the care and services specified in Schedule 1 where the care recipient has a high level respite care classification level. Theref o re in this scenario the patient is not paying any extra money for podiatry services. The funds for these services come from any monies that the patient has already paid to the aged care facility. Further you have informed us that the aged care facility is billed for your services in this scenario. Accordingly, we are of the view that in this scenario that the recipient of your services is the aged care facility as you have entered into a contractual obligation with the aged care facility to provide your services to the patients who reside at the facility. This is a tripartite situation as explained in Goods and Services Taxation Ruling GSTR 2006/9 Goods and Services Tax: Supplies which states the following: Proposition 13: when A has an agreement with B for B to provide a supply to C, there is a supply made by B to A (contractual flow) that B provides to C (actual flow) In this scenario 'A' is the aged care facility, 'B' is the podiatrist, and 'C' is the patient. GSTR 2006/9 further states: 131. 'Made' in the context of 'a supply made' takes its meaning from the definition of 'recipient in section 195-1: recipient , in relation to a supply, means the entity to which the supply was made. 132. 'Provide' is used to contrast with 'made' - it distinguishes between the contractual flow of the supply to the recipient (the entity to which the supply is made) and the actual flow of the supply to another entity (the entity to which the supply is provided). Accordingly, as the aged care facility is the recipient of your services, paragraph 38-10(1)(c) of the GST Act is not satisfied as the services you provide cannot be considered as being necessary for the appropriate treatment of the recipient of the supply. Therefore the provision of podiatry services to patients in an aged care facility, where the facility pays for the service is not GST-free. Section 9-5 of the GST Act provides for taxable supplies. It states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course of 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. Your supply of podiatry services in this scenario is neither GST-free or input taxed under any other provision of the GST Act. You meet each of the four positive limbs set out in section 9-5. Therefore you are making a taxable supply. GST is payable on taxable supplies This outcome is the same regardless of whether you itemise your invoice or bill at an hourly rate.