Private ruling: GST and psychology services
Date of advice: 8 December 2015
Published: February 2016

Ruling: Q1: Are the health services, provided by the professionals to the patients and paid by you under a program funded by the Government, GST-free? | A1: The health services provided by the professionals to the patients and paid by you under the program funded by the Government would be taxable supply and subject to GST where the supply satisfies section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Q2: If a private provider (a professional) is employed by a Practice and the Practice receives payments for services from you, are those health services provided to the patients under the program funded by the Government, GST-free? | A2: Please refer to the answer to question 1. | Q3: Are health services provided to the patients by the Community Health Organisations and for which payments are made by you under the program funded by the Government, GST-free? | A3: Please refer to the answer to question 1.

Relevant facts and circumstances: • You receive Government Grant to administer and pay for health services to patients under the program. • The program is developed to improve the health outcomes of low income and disadvantaged people with particular health issues in the community. • To be eligible for the program people must be unable to access other types of service, such as Better Access, and/or private services. In general people will be unable to pay for such services. It is up to a persons' GP to make this decision around eligibility. • In relation to the program: • The local general practitioner (GP) will decide whether a patient requires health services. • The GP will refer the patient to you and you will assess the patient to determine whether the patient will be eligible to receive the Government funded psychological services under the program. • If the patient is eligible for free services under the program, you will refer the patient back to the GP with the list of professionals who are listed/registered with you. • The GP will select the professional from the list and will refer the patient to them and will advise you of their details. • Then you will send an agreement to the professional confirming that you will pay the cost of providing the necessary health services to the patient. • You pay the entire cost of providing the health services under the program and Medicare does not pay any part of the cost. • The GP will only refer the patients to the professionals who are listed under the program. • GP can refer the patients to other professionals, but the patient will not receive free services if the professionals are not listed under the program. • You do not make any agreements with the patients referred to you by the GP. You just only manage the administration of the program between the GP and the professionals where the patients will receive free health services. • The patients do not pay anything to the professionals. All the services are agreed in advance and you receive invoices from the service providers or create Recipient Created Tax Invoices. • You are registered for GST. • In the majority of cases the Private Providers and/or Practices they are employed by, are registered for GST. • The Community Health Organisations are registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 9-5 and | A New Tax System (Goods and Services Tax) Act 1999 38-10

Reasons for decision: Summary: If a private provider (a professional) is employed by a Practice and the Practice receives payments for services from you, are those health services provided to the patients under the program funded by the Government, GST-free? Please refer to the answer to question 1. Are health services provided to the patients by the Community Health Organisations and for which payments are made by you under the program funded by the Government, GST-free? Please refer to the answer to question 1.

Reasons for decision: A supply of health services is GST-free under subsection 38-10(1) of the GST Act if: | • it is a service of a kind specified in the table in subsection 38-10(1) of the GST Act or specified in the A New Tax System (Goods and Services Tax) Regulations 1999; and | • the supplier is a recognised professional in relation to the supply of services of that kind, and | • 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. | The health services is listed at an item in the table in subsection 38-10(1) of the GST Act (the item). The health services provided by the professionals who are registered with you under the program would satisfy the requirements under paragraphs 38-10(1)(b) as they are recognised professionals. | However, to satisfy paragraph 38-10(1)(c) of the GST Act, the services need to be for the appropriate treatment of the recipient of the supply. Therefore, the recipient of the supply must be the patient receiving the treatment and not a third party such as an employer, insurance company or other entity. | The professionals receive payment from you as a third party for the services provided to the patients. Goods and Services Tax Ruling 2006/9 discusses the meaning and characteristics of a supply. Part 3 of the GSTR 2006/9 discusses multi-party arrangements, commonly known as tripartite arrangements. | Proposition 14 outlined in GSTR 2006/9 discusses when a third party may pay for a supply but not be the recipient of the supply. Paragraph 177 states that subsection 9-15(2) of the GST Act, provides that the payment does not have to come from the recipient of a supply. | To determine whether the third party is a third party payer or the recipient of a supply regard needs to be had to the true character of the transaction and by looking at all of the transactions entered into and the circumstances in which the transactions are made. | In your case, the professionals are required to be registered with you to enable them to provide the services to the patients where the patients are not required to pay for the services provided by the professionals. Once the general practitioner refers the patient to a professional, you will enter into an agreement with the relevant professionals where you will agree to pay them for the services provided to the patient. | The general practitioner may refer the patients to professionals who are not registered with you under the ATAPS program. But the patient is required to pay for the services provided by these professionals and it will not be a free service under the program. | The arrangements between the general practitioner, professionals and you are considered tripartite arrangement. In this case the recipient of the supply would be you as you have entered into an agreement with the professionals to provide the services to the patients who will be assessed by you to receive free services under the program. | Section 38-60 of the GST Act provides that if a supply of health service made to an individual is a GST-free supply of health services, that supply will also be GST-free where the recipient of the supply is: | • an insurer settling a claim under an insurance policy | • an operator of a statutory compensation scheme | • an operator of a compulsory third party scheme | • an Australian government agency. | From 1 July 2012, where a supply is made to the insurer, the scheme operator or the Australian government agency, the supply is GST-free to the extent that the underlying supply of health services to the patient is GST-free. | In this case, although the underlying supply is a GST-free supply of health services, it will not be a GST-free supply to you by the professionals as you are not considered as any of the recipients listed under section 38-60 of the GST Act. | Therefore, the professionals would be making taxable supplies to you under the agreement, provided the supply satisfies all of the requirements under section 9-5 of the GST Act. | Under section 9-5 of the GST Act, an entity makes a taxable supply if it makes the supply for consideration; and the supply is made in the course or furtherance of an enterprise that the entity carries on; and the supply is connected with the indirect tax zone (Australia); and 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 professionals receive consideration from you for the supply that they make to you under the agreement; and they would be making the supply in the course or furtherance of their enterprise of providing health services; and the supply is connected with Australia. | If the professionals are registered or required to be registered for GST, they will be making a taxable supply to you as the supply would satisfy all of the requirements under section 9-5 of the GST Act.