Private ruling: GST and medical and other health services
Date of advice: 1 March 2016
Published: April 2016

Ruling: Q1: Are the services you provide GST-free? | A1: If a Medicare benefit is payable under Part II of the Health Insurance Act 1973 for the services you provide; then those services will be GST-free. Other services may also be GST-free where certain conditions are satisfied. See below for further information.

Relevant facts and circumstances: You are registered for GST. You provide numerous therapy services to your clients. A Medicare benefit is payable under Part II of the Health Insurance Act 1973 for most of the services you provide. Your professional association has received uniform national registration requirements regarding the services you provide. The services you supply are accepted in the profession associated with services of that kind, as being necessary for the appropriate treatment of the recipient of the supply.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsections 38-7(1) and 38-7(2) and 38-10(1)

Reasons for decision: Detailed Reasoning - Subsection 38-7(1): Subsection 38-7(1) A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides a supply of a medical service is GST-free. 'Medical service' is defined 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. (terms marked with asterisks (*) are defined in section 195-1 of the GST Act) The definition of a 'medical service' has two limbs. Any service that falls within either the first or second limb of the definition is GST-free. According to the information provided a Medicare benefit is payable under Part II of the Health Insurance Act 1973 for the services you provide. Where this is the case those services will be GST-free. You informed that you are not sure whether a Medicare benefit is available for one of the services you provide. If you are uncertain as to the acceptability of a procedure, then it is suggested that you seek clarification from your relevant professional association or college. The second limb of subsection 38-7(1) of the GST Act will apply only if the services: • are supplied by or on behalf of a medical practitioner or approved pathology practitioner; and • are generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply. | Detailed Reasoning - On behalf of: The phrase 'on behalf of' for the purposes of the definition of 'medical service' means the performance of a component of the service provided by a practitioner that is not necessarily supervised by that practitioner. An example is where a laboratory technician assists in undertaking pathology testing of specimens. However, 'on behalf of' does not include a service performed on referral by another person. A service performed on referral by another person, is not a component of the supply being provided by the first practitioner. The service being provided by the second person will be a separate supply, the GST-free status of which must be examined by reference to the supply by that second person. For more information about 'medical and other health services' please consult the Health Industry Partnership - issues register which is available on the ATO website at www.ato.gov.au. Generally accepted in the medical profession as being necessary for the appropriate treatment'. The above requires interpretation as to what is meant by 'generally accepted' and 'appropriate treatment'. 'Appropriate treatment' will be established where the practitioner assesses the recipient's state of health and determines a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of the recipient and will include subsequent supplies for the assessed process. 'Appropriate treatment' includes the principles of preventative medicine. In addition, the definition requires the treatment must be generally accepted in the medical profession as being necessary. The particular service being provided by the medical practitioner or approved pathology practitioner and the circumstances in which it is provided must be generally accepted by the medical profession. The words 'generally accepted in the medical profession' indicate that it will ultimately be the medical profession that determines what services will be generally accepted. | Detailed Reasoning - Recipient: Recipient in relation to a supply to mean the entity to which the supply is made. Where your services meets all the requirements of the second limb of subsection 38-7(1) of the GST Act those services will be GST-free. Subsection 38-7(2) Under subsection 38-7(2) of the GST Act certain medical services are specifically exempted from being GST-free. Services performed for cosmetic reasons will be GST-free if they qualify for Medicare benefits. A 'medical service' will be 'rendered for cosmetic reasons' if it is predominantly performed for, or is rendered for the purpose of permitting, the improvement of the personal appearance of a patient, such as a face-lift. Whether a service is for cosmetic reasons must be evaluated on a case by case basis. Procedures that alter or enhance a patient's appearance but have no medical or reconstructive purpose are considered to be cosmetic and are taxable. However, a procedure that is performed for medical or reconstructive reasons is not cosmetic and is GST-free. An example of this is skin grafting performed on a burn victim. A procedure will be for medical reasons if it is predominantly performed for, or is rendered for the purpose of permitting, the alteration of a significant defect in appearance caused by disease, trauma or congenital deformity and: • it is recommended by a psychiatrist or psychologist as being necessary for the psychological wellbeing, or for the appropriate treatment of a psychiatric condition, of that patient, or • the patient is less than 18 years of age and a defect is in an area of the body, which normally and usually would not be clothed. | Detailed Reasoning - Subsection 38-10(1): Subsection 38-10(1) of the GST Act states: 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. You contend that your services come under item 14 of the table in section 38-10 of the GST Act which lists 'Paramedical'. The term paramedical is not defined within the GST Act. Paramedical is defined in Steadman's Medical Dictionary to mean relating to a paramedic. A paramedic is also defined in this dictionary to mean a person trained and certified to provide emergency medical care. It is considered that services provided by a paramedic will be a supply of paramedical services. The services you provide do not meet this definition of paramedical. As a result, all the requirements of subsection 38-10(1) of the GST Act have not been fulfilled and the supplies will be a taxable supply where all the requirements of section 9-5 of the GST Act have been met. Further, paramedical is also defined in Steadman's Medical Dictionary to mean related to the medical profession in an adjunctive capacity e.g. denoting allied health fields such as physical therapy, speech pathology etc. The use of the term paramedical in this sense encompasses a wide variety of health services and most of the items in the table in subsection 38-10(1) of the GST Act would fall within this term. If it were intended to use the term paramedical in this sense, it would not have been necessary to specifically list the various health services that are included in the table in subsection 38-10(1) of the GST Act. As specific health services have been listed in the table, it can be concluded that the term paramedical will have its specific meaning and therefore will be limited to the provision of emergency medical care by a trained and certified person Therefore, we consider that the services you provide do not come under the term 'paramedical' as intended by the GST Act.