Private ruling: Goods and services tax (GST) and a supply of occupational therapy services
Date of advice: 8 January 2019
Published: April 2019

Ruling: Q1: Is the supply of occupational therapy services by an Australian entity (‘you’) to Australian companies subject to GST where your supply of the occupational therapy services is made to the employees of the Australian Companies? | A1: No, the supply of occupational therapy services by you to Australian companies will be taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and subject to GST.


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 9-15 | 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 38-10(1) | A New Tax System (Goods and Services Tax) Act 1999, S e ction 38-60 | A New Tax System (Goods and Services Tax) Act 1999, S e ction 195-1

Reasons for decision: Summary: GST is payable on a taxable supply. You make a taxable supply under section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if: (a) you make the supply for consideration; and (b) the supply is made in the course 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 for GST. However, the supply is not a taxable supply to the extent that it is GST-free or taxable. Your supply occupational therapy services satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act as: (a) you make the supply for consideration; (b) your supply is made in the course of an enterprise (business) that you carry on; (c) your supply is connected with Australia as it is done through a business that you carry on in Australia and (d) you are registered for GST. However, your supply is not a taxable supply to the extent that it is GST-free or input taxed. There are no provisions in the GST Act that make your supply of occupational therapy services input taxed. The next step is to determine whether this supply is GST-free. | Detailed Reasoning - GST-free supply: Subdivision 38-B of the GST Act outlines the supplies of health services and goods which are GST-free. Relevant to your supply of occupational therapy services is subsection 38-7(1) and subsection 38-10(1) of the GST Act. | Detailed Reasoning - Subsection 38-7(1) of the GST Act: Subsection 38-7(1) of the GST Act provides that a supply of a medical service is GST-free. The definition of a medical service in section 195-1 of the GST Act includes a service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973 . The second limb of this definition only applies when the medical service is supplied by (or on behalf of) a ‘medical practitioner’ or ‘approved pathology practitioner’ (and other requirements are satisfied). You advised that no Medicare benefit is payable for the services and therefore your supply of occupational therapy services is not GST-free under subsection 38-7(1) of the GST Act. We need to consider whether your supply of occupational therapy services are GST-free under subsection 38-10(1) of the GST Act. | Detailed Reasoning - Subsection 38-10(1) of the GST Act: A supply of health service is GST-free when it satisfies all the requirements in subsection 38-10(1) of the GST Act. The requirements of subsection 38-10(1) of the GST Act are: (a) the service is specified in the table in this subsection, or in the GST regulations; and (b) the supplier is a recognised professional for the services in question; and (c) the supply would generally be accepted, in the supplier’s profession, as being necessary for the appropriate treatment of the recipient of the supply. Accordingly, the next step is to examine each requirement of subsection 38-10(1) of the GST Act in order to establish whether your supply of the occupational therapy services is GST-free. | Detailed Reasoning - Requirement (a) - the service is specified in the GST Act or Regulations: Item 11 in the table of paragraph 38-10(1)(a) of the GST Act specifies ‘occupational therapy’ for the purposes of this paragraph. As you provide occupational therapy services, your supply of occupational therapy services satisfy the requirement under paragraph 38-10(1)(a) of the GST Act . | Detailed Reasoning - Requirement (b) - the supplier is a recognised professional: To supply GST-free occupational therapy services, you must be a recognised professional for the services you provide. Under section 195-1 of the GST Act a recognised profession is a person who is registered, permitted or approved under a State or Territory law to provide the listed health service. If there is no relevant State or Territory law, a recognised professional is a member of a professional association that relates to the health service and has the same registration requirements nationally. You advised that you provide the occupational therapy services through Kristy Griffiths who is your employee and registered Occupational Therapists with the AHPRA. Therefore, the requirement of paragraph 38-10(1)(b) is satisfied. | Detailed Reasoning - Requirement (c) - the supply is treatment appropriate to the recipient: The third requirement is that the service must be generally accepted in the professions associated with supplying services of that kind as being necessary for the appropriate treatment of the recipient of the supply. | Detailed Reasoning - Supply to be generally accepted: For a supply to be generally accepted, the particular service being provided (in this instance occupational therapy) and the circumstances in which it is provided must be generally accepted as appropriate in the occupational therapy profession. That is the occupational therapy profession ultimately determines which services are generally accepted as appropriate supplies of occupational therapy. | Detailed Reasoning - Appropriate treatment: We consider that appropriate treatment will be established where the recognised professional 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 that recipient insofar as that recognised professional's particular area of training allows and will include subsequent supplies for the determined process. Appropriate treatment includes the principles of preventative medicine. Such treatment must be generally accepted in the profession associated with supplying services of that kind, as being necessary. Appropriate treatment will not include supplies undertaken for a third party, which does not encompass treatment. In some circumstances, the recipient of the supply is not the patient of the professional but is a third party such as an employer. | Detailed Reasoning - Recipient of the supply: A supply of health service is generally GST-free when supplied to the individual requiring that treatment or specific health services. Therefore, it is necessary to determine the recipient of the supply made by the health practitioner. Section 195-1 of the GST Act defines recipient to mean the entity to which the supply was made. When there are two parties to a supply of health services (the health practitioner and the patient), the patient is generally the recipient of the supply. However, the recipient of the supply may not be the patient if there is a third party involved in the transaction. Under multi-party arrangements, we consider that a third party is the recipient of a supply when: ● the third party engages you to make, or to be available to make, a supply to them or to someone else; and ● that third party, by agreement with you, determines the nature of the supply to be made to them or to someone else; and ● there is a binding obligation between that third party and you for the supply and the third party is liable to provide payment. Where all of the above elements are satisfied there will be a supply made by the health practitioner to the third party in addition to any supply that is made where a patient receives the health services You advised us that the Australian companies engage your occupational therapy services and are paying you for the supply made to the employees. Therefore in order to determine the GST status of your supply of occupational therapy services we need to determine who the recipient of that supply is. Based on the information provided, your occupational therapy services to Australian companies includes case management of injuries; Ergonomic assessments; Assist with design and delivery of health and wellbeing initiatives; deliver training and co-ordinate hygiene testing. As these services are requested by Australian companies, the Australian companies are the recipient of your supply of occupational therapy services. The supply of your occupational therapy services is a business to business transaction as the Australian companies are the recipients of the supply. Hence your supply of occupational therapy services is not for ‘appropriate treatment of a patient’. Therefore, your supply of occupational therapy services to the Australian companies does not satisfy paragraph 38-10(1)(c) of the GST Act. Accordingly, your supply of occupational therapy services to Australian companies does not satisfy subsection 38-10(1) of the GST Act and is not GST-free under section 38-10 of the GST Act. Furthermore, the supply of occupational services by you to the Australian companies does not satisfy any other GST-free provisions. Therefore, the supply of occupational therapy services by you to the Australian companies is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on that supply.

Relevant facts: You are an Australian company which is registered for GST. | You provide the occupational therapy services to Australian companies and their employees who require the occupational therapy services. | You provide the occupational therapy services through your employee to who is registered Occupational Therapists with the Occupational Therapy Board of Australia (AHPRA). | The Australian companies contact you and engage your services directly. | The Australian companies are responsible to pay for your supply of occupational therapy services to their employees. | Medicare benefit is not payable for your supply of occupational therapy services to employees of the companies. | You also assist the Australian companies with their obligations in relation to insurance claims and provide case management. The work is predominantly non-compensable claims for Australian companies. | You do not supply any goods in your course of providing the services.