Class Ruling CR 2022/100

What this ruling is about: 1. This Ruling sets out the tax treatment of payments assigned to a representative public dentist (RPD) under the Child Dental Benefits Schedule (CDBS). 2. Details of this scheme are set out in paragraphs 9 to 29 of this Ruling. 3. All legislative references in this Ruling are to the Dental Benefits Act 2008 (DBA), unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to you if you are an RPD who is a 'dental provider' within the meaning of the DBA and the Dental Benefits Rules 2014 (DBR) who: When this Ruling applies 5. This Ruling applies from 1 July 2022. Assessability of assigned dental benefits by patients to a representative public dentist under the Child Dental Benefits Schedule 6. The dental benefit assigned by a patient to a RPD under the CDBS is income according to ordinary concepts and is assessable income of the RPD under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). 7. The amount included in assessable income excludes any goods and services tax (GST) component, as per section 17-5 of the ITAA 1997. Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service 8. The amount paid by the Chief Executive Medicare to a state, territory or health service bank account in respect of the bulk-billed dental benefit assigned to a RPD is an allowable deduction to the RPD under section 8-1 of the ITAA 1997. 9. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. 10. The Minister for Health and Aged Care may, by legislative instrument, make Dental Benefits Rules in order to carry out or give effect to the DBA (section 60). 11. The DBR establishes the operational framework and service items for the CDBS. 12. Services Australia is responsible for administering the payment of dental benefits and the compliance management framework for CDBS. 13. On 1 July 2022, the DBR were amended to, among other things, broaden the definition of 'dental provider'. The amendments allow for dental hygienists, dental therapists and oral health therapists to become dental providers in addition to registered dentists. 14. Under the CDBS: 15. The dental services must be rendered by or on behalf of a dental provider (section 4, meaning of 'dental service'). The following classes of persons are dental providers in relation to dental services under the DBA (section 6, and rule 6 of the DBR), provided they have been issued with a Medicare Provider Number by the Chief Executive Medicare: 16. Section 7 sets out that a dental service is taken to be rendered on behalf of a dental provider if: 17. The following classes of person can render a dental service on behalf of a dental provider who is a registered dentist (rule 7 of the DBR): 18. A 'public sector dental provider' means (as stated in rule 4 of the DBR): 19. One or more public sector dental providers in each state or territory are nominated as RPDs for the provision of dental services under the CDBS. 20. The Chief Executive Medicare issues each RPD with a separate Medicare Provider Number for each practice location for the provision of public dental services. This Medicare Provider Number is separate from any Medicare Provider Number they may have for the delivery of private dental services. 21. Dental providers for the purposes of the DBA must be registered with Medicare Australia and have a Medicare Provider Number issued for the provision of public dental services to be eligible to provide services listed in Schedule 1 of the DBR. 22. The Medicare Provider Number links the benefits claims to an individual practitioner but also identifies the dental provider as being an RPD via use of a public sector speciality code, and a 'public sector dental provider' within the meaning of the DBR. 23. Dental services provided by or under an arrangement with a state or territory are eligible for dental benefits only if: 24. Schedule 2 of the DBR lists the date after which each state or territory government may no longer access benefits, and access to benefits in that state will be limited to private providers only. The Minister has the ability to make exceptions allowing certain access for public providers even if the date in Schedule 2 has been passed (rule 8A of the DBR). 25. Dental benefits payable for an eligible person under the DBR are limited to the cap provided in Schedule 3 of the DBR over a relevant 2-calendar year period. The cap for 2022-23 is $1,026. This amount will continue to apply into the future unless a new amount is provided for. Once the cap amount is reached, no additional benefits can be paid for services provided in the relevant 2-calendar year period (rule 14 of the DBR). Bulk-billing arrangements 26. By convention, all dental services provided under the DBA by public sector dentists are bulk billed. In accordance with the operation of the DBA and DBR, and the administrative arrangements between the Department of Health and Aged Care, Services Australia and state and territory departments, this bulk billing arrangement works as follows: 27. It is an implied or express term of the contract between the RPD and the relevant state, territory or health service that all the claimed assigned dental benefits will be paid to the relevant state, territory or health service into a separately identifiable bank account. 28. Through the Medicare Provider Number, the dental benefits are paid to the relevant state, territory or health service. The RPD does not receive any of the dental benefits payable for the dental services. 29. Dental providers must keep clinical records, where relevant, for a period of 4 years (rule 16 of the DBR). Commissioner of Taxation 9 November 2022 Assessability of assigned dental benefits by patients to a represetantive public dentist under the Child Dental Benefits Schedule 30. Section 6-5 of the ITAA 1997 provides that an amount is assessable income if it is income according to ordinary concepts (ordinary income). 31. The DBA restricts the class of persons who may be assigned dental benefits to dental providers who are registered with Medicare Australia (that is, an RPD). The dental services can be provided by the dental provider, or in the case of a dental provider who is a registered dentist, the dental services can be rendered on their behalf. 32. A dental service is rendered on behalf of a registered dentist if the dental service is performed by another person included in a class of specified person in the DBR and that person provides the dental service in accordance with accepted dental practice, under the supervision of the dental provider. If the registered dentist is not a 'public sector dental provider', the dental services can be rendered on their behalf by a dental hygienist, dental therapist, dental prosthetist or an oral health therapist. If the registered dentist is a public sector dental provider, the dental service can be rendered on their behalf by another public sector dental provider. 33. A dental service will be provided to a patient, either by the RPD, or (in accordance with accepted dental practice) under the supervision of the RPD. In return for the provision of that dental service, the patient agrees to assign to the RPD the dental benefits. 34. That assignment takes place pursuant to a statutory framework, by means of an approved form (DB4-DB or DB2-DB), whereby the patient assigns the dental benefits to the RPD who provided the dental services. The dental benefits are claimed by means of an approved form (DB1N-DB). 35. The RPD does not receive the money because, pursuant to an agreement between the RPD and the relevant state, territory or health service, the claimed assigned dental benefits are paid into a separately identifiable bank account held by the relevant state, territory or health service which contracts the RPD. 36. The RPD derives the claimed assigned dental benefits as income according to ordinary concepts. 37. The state, territory or health service is not a party to the agreement the RPD has with the patient, under which the provision of dental services gives rise to the assignment of the dental benefits. The statutory assignment framework is such that dental benefits can only be assigned to the person (dental provider) who provided or supervised the provision of the dental services. A reward for the performance of personal services in the form of the assigned benefits is income according to ordinary concepts. The fact of non-receipt does not alter this conclusion. 38. In Case T44 86 ATC 366, fees derived by a medical practitioner were paid directly to the hospital where the practitioner performed his medical services, with the hospital receiving the fees in the capacity as his agent. Under the terms of an agreement with the medical practitioner, the hospital deducted an amount from these fees and paid the balance of the fees to a trust fund. The practitioner could in turn be paid a grant by the trust based on a percentage of his salary. As stated by Mr Roach, the question at issue was: 39. In Case T44 86 ATC 366, the assessable income of the medical practitioner was held to include the whole of the fee, notwithstanding the fee was paid directly to the hospital and the practitioner ultimately received only part of this fee. 40. Therefore, although the dental benefit assigned by the patient to the RPD under the CDBS is paid to the relevant state, territory or health service, it remains assessable income of the RPD under section 6-5 of the ITAA 1997. The GST component 41. The amount included in assessable income under section 6-5 of the ITAA 1997 excludes any GST component. Section 17-5 of the ITAA 1997 ensures that an amount is treated as not being assessable income (or exempt income) to the extent that it consists of an amount relating to: Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service 42. Section 8-1 of the ITAA 1997 provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing assessable income and is not: 43. It is a term of the contract between the dental provider and the state, territory or health service that all the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the bank account of the state, territory or health service. That same contract is the framework pursuant to which the dental provider provides dental services and is remunerated. 44. In Service v Commissioner of Taxation [2000] FCA 188, the taxpayer was allowed a deduction for fees obtained from acting as director of other companies and as a member of various governmental bodies which he paid over to his employer company under his employment agreement. The Full Federal Court held that the directors' fees paid to the company were outgoings incurred by the taxpayer in gaining or producing his assessable income from the employer. 45. Under the contract between the dental provider and the state, territory or health service, all of the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the state, territory or health service. Performing dental services under the contract gives rise to assessable income to the RPD and the payment by the Chief Executive Medicare of the claimed assigned dental benefits to the relevant state, territory or health service is incurred in gaining or producing the RPD's assessable income. 46. The payment of the claimed assigned dental benefits by the Chief Executive Medicare to the relevant state, territory or health service is therefore an allowable deduction to the RPD pursuant to Section 8-1 of the ITAA 1997. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Class of entities or scheme: 26. By convention, all dental services provided under the DBA by public sector dentists are bulk billed. In accordance with the operation of the DBA and DBR, and the administrative arrangements between the Department of Health and Aged Care, Services Australia and state and territory departments, this bulk billing arrangement works as follows: 27. It is an implied or express term of the contract between the RPD and the relevant state, territory or health service that all the claimed assigned dental benefits will be paid to the relevant state, territory or health service into a separately identifiable bank account. 28. Through the Medicare Provider Number, the dental benefits are paid to the relevant state, territory or health service. The RPD does not receive any of the dental benefits payable for the dental services. 29. Dental providers must keep clinical records, where relevant, for a period of 4 years (rule 16 of the DBR). Commissioner of Taxation 9 November 2022 | Assessability of assigned dental benefits by patients to a represetantive public dentist under the Child Dental Benefits Schedule: 30. Section 6-5 of the ITAA 1997 provides that an amount is assessable income if it is income according to ordinary concepts (ordinary income). 31. The DBA restricts the class of persons who may be assigned dental benefits to dental providers who are registered with Medicare Australia (that is, an RPD). The dental services can be provided by the dental provider, or in the case of a dental provider who is a registered dentist, the dental services can be rendered on their behalf. 32. A dental service is rendered on behalf of a registered dentist if the dental service is performed by another person included in a class of specified person in the DBR and that person provides the dental service in accordance with accepted dental practice, under the supervision of the dental provider. If the registered dentist is not a 'public sector dental provider', the dental services can be rendered on their behalf by a dental hygienist, dental therapist, dental prosthetist or an oral health therapist. If the registered dentist is a public sector dental provider, the dental service can be rendered on their behalf by another public sector dental provider. 33. A dental service will be provided to a patient, either by the RPD, or (in accordance with accepted dental practice) under the supervision of the RPD. In return for the provision of that dental service, the patient agrees to assign to the RPD the dental benefits. 34. That assignment takes place pursuant to a statutory framework, by means of an approved form (DB4-DB or DB2-DB), whereby the patient assigns the dental benefits to the RPD who provided the dental services. The dental benefits are claimed by means of an approved form (DB1N-DB). 35. The RPD does not receive the money because, pursuant to an agreement between the RPD and the relevant state, territory or health service, the claimed assigned dental benefits are paid into a separately identifiable bank account held by the relevant state, territory or health service which contracts the RPD. 36. The RPD derives the claimed assigned dental benefits as income according to ordinary concepts. 37. The state, territory or health service is not a party to the agreement the RPD has with the patient, under which the provision of dental services gives rise to the assignment of the dental benefits. The statutory assignment framework is such that dental benefits can only be assigned to the person (dental provider) who provided or supervised the provision of the dental services. A reward for the performance of personal services in the form of the assigned benefits is income according to ordinary concepts. The fact of non-receipt does not alter this conclusion. 38. In Case T44 86 ATC 366, fees derived by a medical practitioner were paid directly to the hospital where the practitioner performed his medical services, with the hospital receiving the fees in the capacity as his agent. Under the terms of an agreement with the medical practitioner, the hospital deducted an amount from these fees and paid the balance of the fees to a trust fund. The practitioner could in turn be paid a grant by the trust based on a percentage of his salary. As stated by Mr Roach, the question at issue was: 39. In Case T44 86 ATC 366, the assessable income of the medical practitioner was held to include the whole of the fee, notwithstanding the fee was paid directly to the hospital and the practitioner ultimately received only part of this fee. 40. Therefore, although the dental benefit assigned by the patient to the RPD under the CDBS is paid to the relevant state, territory or health service, it remains assessable income of the RPD under section 6-5 of the ITAA 1997. | The GST component: 41. The amount included in assessable income under section 6-5 of the ITAA 1997 excludes any GST component. Section 17-5 of the ITAA 1997 ensures that an amount is treated as not being assessable income (or exempt income) to the extent that it consists of an amount relating to: | Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service: 42. Section 8-1 of the ITAA 1997 provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing assessable income and is not: 43. It is a term of the contract between the dental provider and the state, territory or health service that all the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the bank account of the state, territory or health service. That same contract is the framework pursuant to which the dental provider provides dental services and is remunerated. 44. In Service v Commissioner of Taxation [2000] FCA 188, the taxpayer was allowed a deduction for fees obtained from acting as director of other companies and as a member of various governmental bodies which he paid over to his employer company under his employment agreement. The Full Federal Court held that the directors' fees paid to the company were outgoings incurred by the taxpayer in gaining or producing his assessable income from the employer. 45. Under the contract between the dental provider and the state, territory or health service, all of the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the state, territory or health service. Performing dental services under the contract gives rise to assessable income to the RPD and the payment by the Chief Executive Medicare of the claimed assigned dental benefits to the relevant state, territory or health service is incurred in gaining or producing the RPD's assessable income. 46. The payment of the claimed assigned dental benefits by the Chief Executive Medicare to the relevant state, territory or health service is therefore an allowable deduction to the RPD pursuant to Section 8-1 of the ITAA 1997. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Ruling: 1. This Ruling sets out the tax treatment of payments assigned to a representative public dentist (RPD) under the Child Dental Benefits Schedule (CDBS). 2. Details of this scheme are set out in paragraphs 9 to 29 of this Ruling. 3. All legislative references in this Ruling are to the Dental Benefits Act 2008 (DBA), unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if you are an RPD who is a 'dental provider' within the meaning of the DBA and the Dental Benefits Rules 2014 (DBR) who: | When this Ruling applies: 5. This Ruling applies from 1 July 2022. | Assessability of assigned dental benefits by patients to a representative public dentist under the Child Dental Benefits Schedule: 6. The dental benefit assigned by a patient to a RPD under the CDBS is income according to ordinary concepts and is assessable income of the RPD under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). 7. The amount included in assessable income excludes any goods and services tax (GST) component, as per section 17-5 of the ITAA 1997. | Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service: 8. The amount paid by the Chief Executive Medicare to a state, territory or health service bank account in respect of the bulk-billed dental benefit assigned to a RPD is an allowable deduction to the RPD under section 8-1 of the ITAA 1997. 9. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. 10. The Minister for Health and Aged Care may, by legislative instrument, make Dental Benefits Rules in order to carry out or give effect to the DBA (section 60). 11. The DBR establishes the operational framework and service items for the CDBS. 12. Services Australia is responsible for administering the payment of dental benefits and the compliance management framework for CDBS. 13. On 1 July 2022, the DBR were amended to, among other things, broaden the definition of 'dental provider'. The amendments allow for dental hygienists, dental therapists and oral health therapists to become dental providers in addition to registered dentists. 14. Under the CDBS: 15. The dental services must be rendered by or on behalf of a dental provider (section 4, meaning of 'dental service'). The following classes of persons are dental providers in relation to dental services under the DBA (section 6, and rule 6 of the DBR), provided they have been issued with a Medicare Provider Number by the Chief Executive Medicare: 16. Section 7 sets out that a dental service is taken to be rendered on behalf of a dental provider if: 17. The following classes of person can render a dental service on behalf of a dental provider who is a registered dentist (rule 7 of the DBR): 18. A 'public sector dental provider' means (as stated in rule 4 of the DBR): 19. One or more public sector dental providers in each state or territory are nominated as RPDs for the provision of dental services under the CDBS. 20. The Chief Executive Medicare issues each RPD with a separate Medicare Provider Number for each practice location for the provision of public dental services. This Medicare Provider Number is separate from any Medicare Provider Number they may have for the delivery of private dental services. 21. Dental providers for the purposes of the DBA must be registered with Medicare Australia and have a Medicare Provider Number issued for the provision of public dental services to be eligible to provide services listed in Schedule 1 of the DBR. 22. The Medicare Provider Number links the benefits claims to an individual practitioner but also identifies the dental provider as being an RPD via use of a public sector speciality code, and a 'public sector dental provider' within the meaning of the DBR. 23. Dental services provided by or under an arrangement with a state or territory are eligible for dental benefits only if: 24. Schedule 2 of the DBR lists the date after which each state or territory government may no longer access benefits, and access to benefits in that state will be limited to private providers only. The Minister has the ability to make exceptions allowing certain access for public providers even if the date in Schedule 2 has been passed (rule 8A of the DBR). 25. Dental benefits payable for an eligible person under the DBR are limited to the cap provided in Schedule 3 of the DBR over a relevant 2-calendar year period. The cap for 2022-23 is $1,026. This amount will continue to apply into the future unless a new amount is provided for. Once the cap amount is reached, no additional benefits can be paid for services provided in the relevant 2-calendar year period (rule 14 of the DBR). | Bulk-billing arrangements: 26. By convention, all dental services provided under the DBA by public sector dentists are bulk billed. In accordance with the operation of the DBA and DBR, and the administrative arrangements between the Department of Health and Aged Care, Services Australia and state and territory departments, this bulk billing arrangement works as follows: 27. It is an implied or express term of the contract between the RPD and the relevant state, territory or health service that all the claimed assigned dental benefits will be paid to the relevant state, territory or health service into a separately identifiable bank account. 28. Through the Medicare Provider Number, the dental benefits are paid to the relevant state, territory or health service. The RPD does not receive any of the dental benefits payable for the dental services. 29. Dental providers must keep clinical records, where relevant, for a period of 4 years (rule 16 of the DBR). Commissioner of Taxation 9 November 2022 | Assessability of assigned dental benefits by patients to a represetantive public dentist under the Child Dental Benefits Schedule: 30. Section 6-5 of the ITAA 1997 provides that an amount is assessable income if it is income according to ordinary concepts (ordinary income). 31. The DBA restricts the class of persons who may be assigned dental benefits to dental providers who are registered with Medicare Australia (that is, an RPD). The dental services can be provided by the dental provider, or in the case of a dental provider who is a registered dentist, the dental services can be rendered on their behalf. 32. A dental service is rendered on behalf of a registered dentist if the dental service is performed by another person included in a class of specified person in the DBR and that person provides the dental service in accordance with accepted dental practice, under the supervision of the dental provider. If the registered dentist is not a 'public sector dental provider', the dental services can be rendered on their behalf by a dental hygienist, dental therapist, dental prosthetist or an oral health therapist. If the registered dentist is a public sector dental provider, the dental service can be rendered on their behalf by another public sector dental provider. 33. A dental service will be provided to a patient, either by the RPD, or (in accordance with accepted dental practice) under the supervision of the RPD. In return for the provision of that dental service, the patient agrees to assign to the RPD the dental benefits. 34. That assignment takes place pursuant to a statutory framework, by means of an approved form (DB4-DB or DB2-DB), whereby the patient assigns the dental benefits to the RPD who provided the dental services. The dental benefits are claimed by means of an approved form (DB1N-DB). 35. The RPD does not receive the money because, pursuant to an agreement between the RPD and the relevant state, territory or health service, the claimed assigned dental benefits are paid into a separately identifiable bank account held by the relevant state, territory or health service which contracts the RPD. 36. The RPD derives the claimed assigned dental benefits as income according to ordinary concepts. 37. The state, territory or health service is not a party to the agreement the RPD has with the patient, under which the provision of dental services gives rise to the assignment of the dental benefits. The statutory assignment framework is such that dental benefits can only be assigned to the person (dental provider) who provided or supervised the provision of the dental services. A reward for the performance of personal services in the form of the assigned benefits is income according to ordinary concepts. The fact of non-receipt does not alter this conclusion. 38. In Case T44 86 ATC 366, fees derived by a medical practitioner were paid directly to the hospital where the practitioner performed his medical services, with the hospital receiving the fees in the capacity as his agent. Under the terms of an agreement with the medical practitioner, the hospital deducted an amount from these fees and paid the balance of the fees to a trust fund. The practitioner could in turn be paid a grant by the trust based on a percentage of his salary. As stated by Mr Roach, the question at issue was: 39. In Case T44 86 ATC 366, the assessable income of the medical practitioner was held to include the whole of the fee, notwithstanding the fee was paid directly to the hospital and the practitioner ultimately received only part of this fee. 40. Therefore, although the dental benefit assigned by the patient to the RPD under the CDBS is paid to the relevant state, territory or health service, it remains assessable income of the RPD under section 6-5 of the ITAA 1997. | The GST component: 41. The amount included in assessable income under section 6-5 of the ITAA 1997 excludes any GST component. Section 17-5 of the ITAA 1997 ensures that an amount is treated as not being assessable income (or exempt income) to the extent that it consists of an amount relating to: | Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service: 42. Section 8-1 of the ITAA 1997 provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing assessable income and is not: 43. It is a term of the contract between the dental provider and the state, territory or health service that all the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the bank account of the state, territory or health service. That same contract is the framework pursuant to which the dental provider provides dental services and is remunerated. 44. In Service v Commissioner of Taxation [2000] FCA 188, the taxpayer was allowed a deduction for fees obtained from acting as director of other companies and as a member of various governmental bodies which he paid over to his employer company under his employment agreement. The Full Federal Court held that the directors' fees paid to the company were outgoings incurred by the taxpayer in gaining or producing his assessable income from the employer. 45. Under the contract between the dental provider and the state, territory or health service, all of the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the state, territory or health service. Performing dental services under the contract gives rise to assessable income to the RPD and the payment by the Chief Executive Medicare of the claimed assigned dental benefits to the relevant state, territory or health service is incurred in gaining or producing the RPD's assessable income. 46. The payment of the claimed assigned dental benefits by the Chief Executive Medicare to the relevant state, territory or health service is therefore an allowable deduction to the RPD pursuant to Section 8-1 of the ITAA 1997. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


Appendix: Assessability of assigned dental benefits by patients to a represetantive public dentist under the Child Dental Benefits Schedule: 30. Section 6-5 of the ITAA 1997 provides that an amount is assessable income if it is income according to ordinary concepts (ordinary income). 31. The DBA restricts the class of persons who may be assigned dental benefits to dental providers who are registered with Medicare Australia (that is, an RPD). The dental services can be provided by the dental provider, or in the case of a dental provider who is a registered dentist, the dental services can be rendered on their behalf. 32. A dental service is rendered on behalf of a registered dentist if the dental service is performed by another person included in a class of specified person in the DBR and that person provides the dental service in accordance with accepted dental practice, under the supervision of the dental provider. If the registered dentist is not a 'public sector dental provider', the dental services can be rendered on their behalf by a dental hygienist, dental therapist, dental prosthetist or an oral health therapist. If the registered dentist is a public sector dental provider, the dental service can be rendered on their behalf by another public sector dental provider. 33. A dental service will be provided to a patient, either by the RPD, or (in accordance with accepted dental practice) under the supervision of the RPD. In return for the provision of that dental service, the patient agrees to assign to the RPD the dental benefits. 34. That assignment takes place pursuant to a statutory framework, by means of an approved form (DB4-DB or DB2-DB), whereby the patient assigns the dental benefits to the RPD who provided the dental services. The dental benefits are claimed by means of an approved form (DB1N-DB). 35. The RPD does not receive the money because, pursuant to an agreement between the RPD and the relevant state, territory or health service, the claimed assigned dental benefits are paid into a separately identifiable bank account held by the relevant state, territory or health service which contracts the RPD. 36. The RPD derives the claimed assigned dental benefits as income according to ordinary concepts. 37. The state, territory or health service is not a party to the agreement the RPD has with the patient, under which the provision of dental services gives rise to the assignment of the dental benefits. The statutory assignment framework is such that dental benefits can only be assigned to the person (dental provider) who provided or supervised the provision of the dental services. A reward for the performance of personal services in the form of the assigned benefits is income according to ordinary concepts. The fact of non-receipt does not alter this conclusion. 38. In Case T44 86 ATC 366, fees derived by a medical practitioner were paid directly to the hospital where the practitioner performed his medical services, with the hospital receiving the fees in the capacity as his agent. Under the terms of an agreement with the medical practitioner, the hospital deducted an amount from these fees and paid the balance of the fees to a trust fund. The practitioner could in turn be paid a grant by the trust based on a percentage of his salary. As stated by Mr Roach, the question at issue was: 39. In Case T44 86 ATC 366, the assessable income of the medical practitioner was held to include the whole of the fee, notwithstanding the fee was paid directly to the hospital and the practitioner ultimately received only part of this fee. 40. Therefore, although the dental benefit assigned by the patient to the RPD under the CDBS is paid to the relevant state, territory or health service, it remains assessable income of the RPD under section 6-5 of the ITAA 1997. | The GST component: 41. The amount included in assessable income under section 6-5 of the ITAA 1997 excludes any GST component. Section 17-5 of the ITAA 1997 ensures that an amount is treated as not being assessable income (or exempt income) to the extent that it consists of an amount relating to: | Deductibility of amounts paid by the Chief Executive Medicare to the state, territory or health service: 42. Section 8-1 of the ITAA 1997 provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing assessable income and is not: 43. It is a term of the contract between the dental provider and the state, territory or health service that all the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the bank account of the state, territory or health service. That same contract is the framework pursuant to which the dental provider provides dental services and is remunerated. 44. In Service v Commissioner of Taxation [2000] FCA 188, the taxpayer was allowed a deduction for fees obtained from acting as director of other companies and as a member of various governmental bodies which he paid over to his employer company under his employment agreement. The Full Federal Court held that the directors' fees paid to the company were outgoings incurred by the taxpayer in gaining or producing his assessable income from the employer. 45. Under the contract between the dental provider and the state, territory or health service, all of the claimed assigned dental benefits are paid by the Chief Executive Medicare directly to the state, territory or health service. Performing dental services under the contract gives rise to assessable income to the RPD and the payment by the Chief Executive Medicare of the claimed assigned dental benefits to the relevant state, territory or health service is incurred in gaining or producing the RPD's assessable income. 46. The payment of the claimed assigned dental benefits by the Chief Executive Medicare to the relevant state, territory or health service is therefore an allowable deduction to the RPD pursuant to Section 8-1 of the ITAA 1997. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | (iii) an internal Territory; or | (iv) a local governing body; or | (v) an authority established by a law of the Commonwealth, a law of a State or a law of an internal Territory; or | (b) a dental provider on whose behalf another dental provider provides dental services under an arrangement with a body mentioned in subparagraph (a) (i), (ii), (iii), (iv) or (v). | ... whether moneys generated by an account of a taxpayer rendered by, and paid to, his agent and applied in accordance with an agreement between the taxpayer and his agent constitutes assessable income of the taxpayer in the year in which payment is made by the debtor. In my view it does.


Legislative references: ITAA 1997 6-5 ITAA 1997 8-1 ITAA 1997 17-5 DBA 2008 4 DBA 2008 6 DBA 2008 7 DBA 2008 9 DBA 2008 11 DBA 2008 13 DBA 2008 15 DBA 2008 23 DBA 2008 24 DBA 2008 27 DBA 2008 60 DBA 2008 61 DBR 2014 4 DBR 2014 6 DBR 2014 7 DBR 2014 8A DBR 2014 9 DBR 2014 14 DBR 2014 16 DBR 2014 Sch 1 DBR 2014 Sch 2 DBR 2014 Sch 3
Case references: Case T44 86 ATC 366
Other references: Medicare approved forms: DB1N-DB DB2-DB DB4-DB