Private ruling: GST and tax invoices
Date of advice: 30 April 2019
Published: June 2019

Ruling: Q1: How do I invoice the company to which I am contracted to perform services for GST purposes? | A1: Under the terms of the agreement between yourself and the Company, you are making taxable supplies to the Company, of physiotherapy and acupuncture services. As such, you are required to charge GST when invoicing the Company for your services under the agreement between you and the Company. A document you issue to the Company in respect of your services that meets the requirements of subsection 29-70(1) or (1A) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) will be a tax invoice in respect of your services. All further legislative references are to the GST Act unless otherwise stated.

Relevant facts and circumstances: You and the Company are registered for Goods and Services Tax (GST). You and the Company signed an Agreement in which you agree to provide your services of physiotherapy and acupuncture to the Company as detailed in the agreement. You have provided a copy of your agreement with the Company. You have provided an example tax invoice. The Company provides you premises in which to practise. Your existing patients now attend your new consulting rooms for their treatment. The Company bills the patients using your provider number. The Company pays you the fee as stipulated in the clauses and schedule contract. You are required to invoice the Company for your service in accordance to the billing clauses in the Agreement. It is understood the Company makes taxable supplies to you of administrative services and the use of consulting rooms. You have sought a private ruling on your question as you are unsure whether your supplies to the Company are subject to GST which would affect how they are reflected on invoices you issue to the Company.

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 11-5 | A New Tax System (Goods and Services Tax) Act 1999 – section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 – section 38-7 | A New Tax System (Goods and Services Tax) Act 1999 – section 195-1

Reasons for decision: Summary: Section 9-40 of the GST Act establishes that the supplier is liable to remit GST on any taxable supplies made. Section 9-5 of the GST Act states a taxable supply is a supply made by an entity: ● for consideration, ● in the course of the entity’s enterprise, ● connected with the Indirect Tax Zone, and ● is registered or required to be registered for GST. However, a supply is not a taxable supply to the extent that the supply is GST-free or input taxed. What needs to be determined in this case is the characterisation of the supplies that are being made, who makes those supplies and who is the recipient of the supplies. The Company owns a medical practice and makes facilities available to you in which to practise. You operate as an independent contractor renting premises from the Company. In this case it is understood the Company’s supplies of rental premises and administrative services to you meet the requirements of section 9-5 and are thus taxable supplies. On this basis, the Company will be liable to remit GST on such taxable supplies to you. | Detailed Reasoning - Medical service: Section 195-1 of the Act defines ‘medical service’ as: (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. In this case based on the facts provided that under the contract the Company is supplying the service to the patient (as opposed to performing the service) and the Company is entitled to consideration for such service from the patient in their own name. This is evidenced by the fact that the billing of patients is done by the Company albeit using your provider number. The supply of a ‘medical service’ for which Medicare benefit is payable by the Company to the patient will be GST-free where the requirements of section 38-7 of the GST Act are satisfied. Therefore in light of the above the Company is supplying the service to the patient and is entitled to consideration from the patient for the performance of service. You are performing the service and supplying your professional services to the Company. Under the second limb of the definition of ‘medical service’ under section 195-1 of the GST Act, a ‘medical 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. With regard to the supply by you to the Company in this case, the Company engages you for the acquisition of your services which the Company supplies to patients. There is an enforceable obligation between you and the Company and the Company is liable to provide consideration for your services. The recipient of your professional services is the Company who is not the patient. The patient is understood to be the recipient of appropriate treatment accepted in the medical profession as opposed to the Company. Therefore the supply you make to the Company is not of a medical service as defined in the Act. Accordingly it is not GST-free under section 38-7, and as a result is a taxable supply. Accordingly you are required to issue a tax invoice to the Company for 100% of the billing fees plus charge 10% GST of the total. You are required to remit the GST payable to the ATO in your Business Activity Statement (BAS). The above GST treatment is consistent with the treatment of common working arrangements between doctors and surgeries discussed on the ATO’s Health Industry Partnership - issues register which can be found on the ATO’s website www.ato.gov.au (or alternatively can be accessed from the following weblink). https://www.ato.gov.au/Business/GST/In-detail/GST-issues-registers/Health-Industry-Partnership---issues-register/?page=142 | Detailed Reasoning - Creditable acquisitions: As stated above, it is understood the Company’s supplies of rental premises and administrative services to you meet the requirements of section 9-5 and are thus taxable supplies. Under section 11-5 of the GST Act you make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or a liable to provide, consideration for the supply; and (d) you are registered, or required to be registered. The Company provides ‘inputs’ under the contract, such as the premises, medical supplies and receptionist staff. The Company invoices you for the services it provides to you that is the provision of the premises and administrative services. You are the recipient of the supply from the Company and if all the requirements of section 11-5 are satisfied in respect of the acquisition, you will be entitled to the input tax credits on the acquisition from the Company. Note that you will be required to hold a tax invoice in respect of the acquisition in order to claim and attribute such input tax credits to a particular tax period.