Private ruling: GST and medical service
Published: December 2013

Ruling: Q1: Is the supply of the new medical procedure a supply that meets the requirements of a GST-free medical service under subsection 38-7(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supply of the new medical procedure meets the requirements of a GST-free supply of a medical service under subsection 38-7(1) of the GST Act if it is generally accepted by the medical profession. It is ultimately the medical profession that determines what services will be generally accepted.

Relevant facts and circumstances: · Entity A is registered for the goods and services tax (GST). · Entity A provides the new medical procedure as a medical service to its patients. · The nominated doctors perform all the procedures. · The nominated doctors (medical practitioners) are registered and are required to be registered as medical practitioners under the Australian Health Practitioner Regulation Agency (AHPRA). · The medical practitioners provide their services under the regulations and guidance of both the regulatory body AHPRA and an international body. · The provision of the new medical procedure is not considered a service for which Medicare benefits are payable under the Health Insurance Act 1973 . The procedure is not covered by health funds or Medicare. · The new medical procedure is provided for the treatment of a number of illnesses. · The majority of patients treated by Entity A are referred by other medical service professionals. · Most patients have already been seen by their general practitioner and have completed the relevant requirements. · In assessing and treating patients: o Entity A provides an initial consultation to patients. o Patients are then scheduled for treatment (if suitable) following their initial consultation. o Patients receive a post procedure treatment within D days, followed by regular follow ups depending on the patients' individual needs. · The overall procedure usually takes H hours. · The medical practitioners follow strict medical guidelines for all of their procedures. In this regard, they adhere to guidelines set by the AHPRA and they follow guidelines provided by the relevant professional bodies. · The medical practitioners also follow the protocols and regulations set by a peer-reviewed treatment plan for each individual. · The new medical procedure has been subject to articles published in journals in Australia and overseas in relation to its use in treating certain medical conditions in patients. · The use of the new medical procedure in treating patients is still evolving. Their introduction to medicine is relatively new. · Some uses of the new medical procedure may still be regarded as experimental or require their efficacy to be verified because their use in certain types of treatment is new. · There is a growing body of research and positive clinical trials in relation to the use of the new medical procedure to treat certain illnesses. · The treatments used by Entity A are restricted to use in medical procedures with respect to which the restoration and improvement to the patient's wellbeing has been demonstrated. · Other entities in Australia use this procedure for the treatment of the same medical conditions. · There is currently no industry body in relation to medical practitioners who use the new medical procedure for treating patients. · There is no professional association or society in Australia specific to the new medical procedure. However, there is a move towards establishing an industry body in Australia. · The use of the new medical procedure is advancing both in Australia and internationally, with a number of clinics in Australia and overseas providing similar treatments.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-7(1); | A New Tax System (Goods and Services Tax) Act 1999 subsection 38-7(2); and | A New Tax System (Goods and Services Tax) Act 1999 section 195-1.

Reasons for decision: Summary: Subsection 38-7(1) of the GST Act provides that a supply of a medical service is GST-free. However, a medical service is not GST-free under subsection 38-7(1) of the GST Act where it falls within the provisions of subsection 38-7(2) of the GST Act. The term 'medical service' is defined in section 195-1 of the GST Act 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. Asterisked terms are defined in the Dictionary, starting at section 195-1 of the GST Act. A Medicare benefit is not payable under Part II of the Health Insurance Act 1973 for the supply of the medical procedure to patients. Therefore, we need to consider whether the supply will be a 'medical service' as defined under paragraph (b) above. The definition of medical service under paragraph (b) above contains a number of elements, all of which must be satisfied before a service will be a medical service. Supplied by or on behalf of a medical practitioner In this case, the nominated doctors are registered medical practitioners under the Australian Health Practitioner Regulation Agency (AHPRA). The medical practitioners perform the procedures personally. As such, the requirement that the services are provided 'by or on behalf of a medical practitioner' is satisfied. Generally accepted in the medical profession as being necessary for the appropriate treatment The definition in paragraph (b) above requires that the treatment must be generally accepted in the medical profession as being necessary. That is, the particular service being provided by the medical 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. The new medical procedure is a relatively new and mostly at an experimental stage. Even though it is a new procedure, its use is advancing both in Australia and internationally. In relation to a new procedure becoming generally accepted, the ATO View is contained in the Health Industry Partnership Issues Register at issue 1.a.5., which discusses amongst other things whether it is at the time of publication in a reputed medical journal, when recommended by the relevant Australasian medical college or when incorporated into the Medicare Benefit Schedule. In this case, the new medical procedure has not been incorporated into the Medicare Benefit Schedule. The use of the new medical procedure has been subject to articles published in journals in Australia and overseas in relation to its use in treating certain medical conditions in patients. There is no relevant professional association or society in Australia. However, there is a move towards establishing an industry body in Australia. The ATO View in the Health Industry Partnership Issues Register at issue 1.a.5. considers that special new procedures may still be 'generally accepted' as 'appropriate treatment' for the recipient depending on individual circumstances, even though the procedures are of an experimental nature and carry inherent risks. The fact that there is no association specifically for the new medical procedure does not preclude the conclusion that such treatment and therapy is not generally accepted. Therefore, being 'generally accepted in the medical profession' is determined by the medical profession. 'Appropriate treatment' will be established where the practitioner assesses the recipient's state of health and determines a process or a course of action 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 this case, in assessing and treating patients: · Entity A provides an initial consultation to patients; · Patients are then scheduled for treatment (if suitable) to restore or improve their wellbeing; · Patients receive a post procedure treatment within D days, followed by regular follow ups. As such, the process undertaken is consistent with the ATO view of what is considered to be appropriate treatment, that is, the medical practitioner · assesses the patient's state of health and needs; · determines a course of treatment to preserve, restore or improve the patient's physical or psychological wellbeing; and · provides treatment consistent with the assessment and needs of the patient, including post operation treatment and monthly follow ups, depending on the patient's needs. Therefore, the requirement of 'appropriate treatment' is satisfied. Recipient of the supply In addition to a service being supplied by or on behalf of a medical practitioner, being generally accepted, the service must also be appropriate treatment of the recipient. Section 195-1 of the GST Act defines 'recipient' in relation to a supply to mean the entity to which the supply was made. In this case, the recipient of the new medical procedure is the relevant patient. Whether the services are considered to be for cosmetic reasons If a Medicare benefit is not payable it is then necessary to consider if the service is rendered for cosmetic reasons. 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. Procedures that alter or enhance a patient's appearance but have no medical or reconstructive purpose are considered to be cosmetic and are not GST-free. Entity A has advised that the new medical procedure is performed to treat the specified illnesses and to improve the patient's health. The treatments, under these circumstances, would not be considered to be for cosmetic reasons. Therefore, if the new medical procedure is generally accepted in the medical profession as being necessary for the appropriate treatment of the patient, then, Entity A will be making a GST-free supply of a medical service when they provide the new medical procedure for the treatment of the patient's illness.