When does GST apply to medical services?

Generally, the supply of medical services to patients are GST-free. However, there are certain scenarios which could attract the requirement to charge GST on a medical service supply. This can make interpreting the GST obligations for providing such services difficult for medical practitioners to decipher.

The ATO defines a medical service as:

• a service for which a Medicare benefit is payable; or
• any other service supplied by or on behalf of a medical practitioner or approved pathology practitioner that is necessary for the appropriate treatment for the patient.

Scenarios when the supply of medical services are GST Free

Medical services are generally considered GST free, where it is covered by Medicare benefit payments, the NDIS or private health insurance.

Services performed on behalf of a medical practitioner

Where services are performed on behalf of a medical practitioner, such as by a nurse, these services will be GST Free if:

• it is billed in the name of the medical professional and they accept full responsibility for the service
• it is part of the service the medical professional provides
• the medical professional is involved in at least part of that particular service.

Supply of services through a third party

Medical and other health services are sometimes provided where the service for a patient is organised and paid for by a third party.

These third-party arrangements are most common via a private health insurer. If the service would ordinarily be GST-free if it was to be provided directly by a medical practitioner, it will also be GST-free when contracting via the third party.

The GST free treatment on the services described above also extends to Allied Health practitioners.

Scenarios when the supply of medical services are subject to GST

Health Clinics Arrangements

Where medical practitioners enter arrangements with clinics for providing medical services to patients, then certain services may be subject to GST, depending on who is engaging the patient directly.

If the clinic contracts the medical practitioner to provide services to the clinic’s patient:

• the supply by the medical practitioner to the clinic will not usually be GST-free
• the supply of the medical practitioner’s services by the clinic to the patient will generally be GST-free

If instead the medical practitioner contracts the clinic to provide rooms and administration services to the medical practitioner:

• the supply of the rooms and administration services by the clinic to the medical practitioner are not GST-free
• the supply by the medical practitioner to the patient will generally be GST-free

Medical Reports

Where a medical report is conducted and prepared at the request of a third-party (i.e. for an insurance company or lawyer), and no Medicare benefits are payable for the report, then GST will apply for this service.

Cosmetic procedures

The supply of health services undertaken solely for cosmetic reasons, where no Medicare benefit is payable, will be subject to GST. This includes liposuction, facial implants, anti-wrinkle injections and eyelid surgeries.

Conclusion

If you would like to understand more about whether the medical services your business is providing are GST Free, please contact Link Advisors and we can assist to help ensure that your business is meeting its tax obligations.