Private ruling: Goods and services tax (GST) and a supply of membership subscriptions
Date of advice: 19 July 2018
Published: September 2018

Ruling: Q1: Is the supply of membership subscription by an Australian entity (you) to members in Australia subject to GST? | A1: Yes. The supply of membership subscriptions by you to members in Australia is a taxable supply, and subject to GST.

Relevant facts and circumstances: You are an Australian entity which is registered for GST. You are carrying on enterprise of physiotherapy clinic specialising in the treatment and rehabilitation for athletes. You offer membership subscriptions to your services on your website. The membership fee is $XX including GST per month. The membership gives members unlimited access to all online training plans and advice. The members are not required to be assessed by a physiotherapist to determine their suitability for membership. Anyone can become a member. Once you become member the members then login to your website which gives access to range of resources including articles and videos on a variety of topics including: ● injury management ● stretching techniques and advice ● foam rolling techniques ● core stability programs ● nutrition strategies ● training advice ● hill and stair running technique The members have access to your registered physiotherapist. The physiotherapist gives online support to the members and provides advice on managing existing injuries and preventative further injuries. The physiotherapist does not provide any hands on physiotherapy treatment to the members. If members require physiotherapy treatment, the physiotherapist would advise them to either come to see them or a practitioner in their area. The members who require physiotherapy treatment pay extra for the treatment.

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 19 99 Division 38 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-7 | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision: Summary: Taxable supply Under section 9-5 of the GST Act , an entity makes a taxable supply if: a) the entity makes the supply for consideration; and b) the supply is made in the course or furtherance of an enterprise that it carries on; and c) the supply is connected with Australia; and d) the entity is 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. The supply of your services to members in return for the fee will be a taxable supply if all the requirements in section 9-5 of the GST Act are satisfied. Based on the facts provided, the supply of your services members satisfies paragraphs 9-5(a) to 9-5(d) of the GST Act as follows: (a) you make a supply of services in return for consideration by way of a membership fees; (b) the supply is made in the course of your business; (c) the services are performed/provided in Australia and/or the supply is made through an enterprise (business) that you carry on in Australia (and therefore the supply is connected with Australia); and (d) you are registered for GST in Australia. However, the supply of your services to members is not taxable to the extent that it is GST-free or input taxed. The supply of your services to members in Australia does not satisfy the input taxed provisions under the GST Act. The GST-free provisions are taken into consideration below. | Detailed Reasoning - GST-free: Under subsection 38-7(1) of the GST Act) a supply of a ‘medical service’ is GST-free. A 'medical service' is defined under section 195-1 of the GST Act to mean: (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. The Medicare Australia website indicates that there is no Medicare benefit payable under Part II of the Health Insurance Act 1973 for the physiotherapy services that you provide. As no Medicare benefit is payable, your services do not fall under paragraph (a) of the definition of medical service in section 195-1 of the GST Act. As such, we need to consider whether your services satisfy paragraph (b) of the definition of 'medical service' in section 195-1 of the GST Act. Part of that definition requires that the service be supplied by or on behalf of a medical practitioner or an approved pathology practitioner. The terms 'medical practitioner' and 'approved pathology practitioner' are separately defined under section 195-1 of the GST Act to mean a person who is, for the purposes of the Health Insurance Act 1973 , a medical practitioner or an approved pathology practitioner. The phrase 'on behalf of' in paragraph (b) of the definition of a 'medical service' under section 195-1 of the GST Act will not include a service performed as a result of a referral by a medical practitioner. A service performed as a result of a referral by another person, such as a medical practitioner, is not a component of the supply being provided by or on behalf of the referring medical practitioner. The service performed on referral is a separate service, the GST status of which must be considered independently. You are not a medical practitioner or an approved pathology practitioner. Furthermore, you do not supply your services on behalf of a medical practitioner or an approved pathology practitioner. As such your services do not fall under paragraph (b) of the definition of medical service in section 195-1 of the GST Act. Accordingly, as the physiotherapy services supplied by you under the terms of the membership contracts are not medical services as defined in section 195-1 of the GST Act, they are not GST-free under section 38-7 of the GST Act. | Detailed Reasoning - Supply of other health services: Subsection 38-10(1) of the GST Act deals with 'other health services' which are GST-free and states as follows. A supply is GST-free if: a) it is a service of a kind specified in the table to subsection 38-10(1) of the GST Act 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. All of the above requirements must be satisfied for the supply of your physiotherapy services to be GST-free. Paragraph 38-10(1)(a) of the GST Act To satisfy the requirement in paragraph 38-10(1)(a) of the GST Act, the your services must be specified in the table in subsection 38-10(1) of the GST Act or the GST Regulations. At this stage, no regulations have been made in relation to section 38-10 of the GST Act. Physiotherapy services are listed at item 17 in the table in subsection 38-10(1) of the GST Act. Therefore, when provided in their own right, a supply of physiotherapy services will satisfy the first requirement in paragraph 38-10(1)(a) of the GST Act. Therefore, when provided in their own right, a supply of physiotherapy services will satisfy the first requirement in paragraph 38-10(1)(a) of the GST Act. However, if the services are provided as a standard technique or a component of the supply of physiotherapy by a recognised physiotherapist and these services 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 those services, the supply will satisfy the requirements of paragraph 38-10(1)(a) of the GST Act. Paragraph 38-10(1)(b) of the GST Act -Recognised professional With respect to the second condition, section 195-1 of the GST Act defines a recognised professional for the purposes of subsection 38-10 of the GST Act. recognised professional : a person is a recognised professional, in relation to the supply of a service of a kind specified in the table in subsection 38-10(1) , if: (a) the service is supplied in a State or Territory in which the person has a permission or approval, or is registered, under a * State law or a * Territory law prohibiting the supply of services of that kind without such permission, approval or registration; or (b) the service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind; or (c) in the case of services covered by item 3 in the table - the service is supplied by an accredited service provider within the meaning of section 4 of the Hearing Services Administration Act 1997 . For the purposes of paragraph 38-10(1)(b) of the GST Act, it is considered that the focus is whether the performer of the service is a recognised professional in respect of the listed services. You have advised us that you have a qualified physiotherapist who is authorised by the Physiotherapists Registration Board. You advised that the membership gives access to range of resources including articles and videos on variety of the topics. Your physiotherapist may provide advice on managing existing injuries and preventative further injuries. However, the members are not directly supervised by your physiotherapist. Therefore, paragraph 38-10(1)(b) of the GST Act is not satisfied. Paragraph 38-10(1)(c) of the GST Act- Appropriate treatment With respect to the third requirement in paragraph 38-10(1)(c) a recognised health professional will provide appropriate treatment if they assess a patient’s health and plan a course of action to preserve, restore or improve the physical or psychological wellbeing of that patient, as far as their training allows. The treatment is appropriate if the relevant health profession would generally accept it as appropriate for the patient. Based on the information provided, the members are not required to be assessed by the physiotherapist to determine their suitability for the membership. The members are not entitled to get one to one-on-one session with a physiotherapist. Therefore, your supply of the membership services does not satisfy Paragraph 38-10(1)(c) of the GST Act. Accordingly, you supply of membership services 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 the membership by you to members in Australia does not satisfy any other GST-free provisions. Therefore, the supply of membership subscriptions by you to the members in Australia by you to members in Australia is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on that supply.