Private ruling: GST and Health
Published: February 2014

Ruling: Q1: Is the supply of a vaccine to a patient a taxable supply? | A1: Yes | Q2: Is the supply of pre-employment medicals a taxable supply in the following circumstances: (a) Pre-employment medicals performed on behalf of third parties and paid for by the third party? (b) Pre-employment medicals provided to a patient directly and paid for by the patient? | A2: Yes, in both instances.

Relevant facts and circumstances: • You operate medical practices at a number of locations. • The practices are registered for goods and services tax (GST). • You supply vaccines to patients. e.g. travel vaccines, and the supply is not part of any medical consultation, no consultation with a Doctor occurs. • A nurse at the medical practices injects the vaccine and you do not charge for this service. • The vaccines are not part of the Pharmaceutical Benefits Scheme (PBS). • When you purchase the vaccine from your wholesaler you pay GST on the purchase and when you sell the vaccine to the patient they charge GST on the supply. • The 'Company Medical' is a medical assessment as required by the Company. Every company in the associated industry must ensure that a health assessment is carried out for each person who is to be offered employment, or is already employed in the industry. The assessment is performed by Nominated Medical Advisers in accordance with a departmental medical assessment form. These doctors can also be nominated by the employer. The medical assessment must be carried out before the person is employed in the industry and periodically thereafter. However, a complete assessment must be performed at least once every X years while still employed in the industry. • You carry out a number of pre-employment checks for third parties, GST is charged on these services and is billed to the third party. • In some instances a patient seeks a pre-employment check. The medical service is for the purpose of obtaining employment and is paid for by the patient directly and is not contracted by a third party.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 : Section 9-5 | Section 38-7 | Section 38-50 | Section 195-1

Reasons for decision: Detailed Reasoning - Question 1: Summary The supply of a vaccine is a taxable supply of a good under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Detailed reasoning Under section 9-5 of the GST Act the supply of goods or services that you make is 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. From the facts provided, you make the supply the vaccinations for consideration, the supply is made in the course or furtherance of your medicinal enterprise, the supply is connected with Australia and you are registered for GST. Therefore, the supply of the vaccines will be a taxable supply under section 9-5 of the GST Act to the extent that the supply is not GST-free or input taxed. There are no provisions in the GST Act under which the supply of the vaccines would be input taxed, however a supply of a vaccine may be GST-free under Division 38 of the GST Act subject to certain conditions. | Detailed Reasoning - GST-free supply: Sub-section 38-7(3) of the GST Act provides that: (3) A supply of goods is GST-free if: (a) 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 (b) it is made at the premises at which the medical service is supplied. In order for paragraph 38-7(3)(a) to be satisfied, the goods must be supplied at the same point in time at which the GST-free medical service is supplied and the goods must have been either: (a) customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free medical service; or (b) necessarily utilised as an integral part of the patient's treatment required immediately during that specific attendance. On the facts provided your supply of vaccines is not part of any medical consultation, no consultation with a Doctor occurs and a nurse at the medical practices injects the vaccine and you do not charge for this service. Therefore, the first limb of sub-section 38-7(3) is not satisfied. As you are registered for GST and all the requirements of section 9-5 of the GST Act are met, the sale of the vaccines to clients will be a taxable supply. The supply of the service of vaccination is out of scope for GST as no consideration is provided for this service and therefore all the requirements of section 9-5 of the GST Act are not met. | Detailed Reasoning - Question 2 (a): Summary A service for which a Medicare benefit is payable, is GST-free under section 38-7 of the GST Act. However where no Medicare benefit is payable, a medical examination for the purposes of preparing a report and the actual preparation of the report for the gaining of employment will not be 'appropriate treatment'. They are not undertaken predominantly for the purpose of preserving, restoring or improving the physical or psychological wellbeing of the patient and are completed for furnishing to a third party. Therefore, the service is not a medical service and is not GST-free under section 38-7 of the GST Act. Detailed reasoning Subsection 38-7(1) GST Act states that a supply of a "medical service" is GST-free. Section 195-1 of the GST Act defines a 'medical service' to mean: (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. | Detailed Reasoning - Recipient of the supply: Section195-1 of the GST Act defines 'recipient' in relation to a supply to mean the entity to which the supply was made. In some circumstances, the 'recipient of the supply' is not the patient of the practitioner but is a third party such as an employer. 'Appropriate treatment' will not include supplies undertaken for a third party that does not encompass the concept of treatment. For example, an insurance company is a third party who may be the actual 'recipient of the supply', where an assessment of a person is made for insurance purposes, there is no actual treatment involved and such a supply will be taxable. In this situation, the examination and writing of the report does not involve the 'appropriate treatment of the recipient of the supply'. Accordingly as the medical examination and report completion is undertaken as a requirement of the Company, the examination as well as the subsequent report will be a taxable supply. The recipient of the supply is the employer, and the supply is not for the appropriate treatment of the recipient. Paragraph (b) of the definition of 'medical service' is not satisfied, and the supply of the consultation will be subject to GST. | Detailed Reasoning - Question 2 (b): Summary A service for which a Medicare benefit is payable, is GST-free under section 38-7 of the GST Act. However where no Medicare benefit is payable, a medical examination for the purposes of preparing a report and the actual preparation of the report for the gaining of employment will not be 'appropriate treatment'. They are not undertaken predominantly for the purpose of preserving, restoring or improving the physical or psychological wellbeing of the patient and are completed for furnishing to a third party. Therefore, the service is not a medical service and is not GST-free under section 38-7 of the GST Act. Detailed reasoning For the reasons provided in 2(a) above the the supply of a pre-employment medical provided to a patient directly and paid for by the patient is a taxable supply.