What is a medical service?
Medical services are GST-free. A medical service is either one of the following:
- a service for which a Medicare benefit is payable
- 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.
Where the recipient of the supply is not the patient but is another business or organisation, the supply is not GST-free as a medical service unless a Medicare benefit is payable.
Some medical services are not GST-free, including cosmetic procedures where no Medicare benefit is payable – for example, removal of a tattoo.
Services performed on behalf of a medical professional
A service is performed on behalf of a medical professional if the following conditions are met:
- 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.
Example: GST-free service performed on behalf of a medical professional
Dr Jones, a medical practitioner, employs Angela, a nurse. Angela bandages Dr Jones's patient as part of the treatment. Because Angela performs the bandaging on behalf of Dr Jones, the bandaging is also GST-free.
End of exampleReferrals
When a medical practitioner refers a patient to another person, such as a specialist, that second person's service is not:
- performed on behalf of the referring practitioner
- part of the referring practitioner's supply.
The service provided by the second person must be considered separately to work out if it is GST-free.
Example: referral to another person
Dr Jones refers a patient to a physiotherapist. The GST status of Dr Jones's service and the physiotherapist's service must be considered separately.
End of exampleMedical reports
A medical report that a medical practitioner supplies is only GST-free where one of the following is provided:
- a Medicare benefit is payable for the report
- the report is an ordinary and natural part of the performance of the GST-free medical service.
Example: report supplied to an insurer
Dr Green provides GST-free medical services to Annabelle. The services provided to Annabelle are paid by worker’s compensation. As the service is covered by worker’s compensation, a Medicare benefit is not payable for the services.
City Insure contacts Dr Green and asks her to provide a progress report on Annabelle’s treatment and an estimate of the number of further treatments that Annabelle requires. A Medicare benefit is not payable for the report.
The report by Dr Green to City Insure is not GST-free because:
- a Medicare benefit is not payable for the report
- City Insure is the recipient of the supply
- the report is not a natural part of the performance of the GST-free medical service that Dr Green supplies to Annabelle.
Medical report for injury compensation
The same requirements for a medical report to be GST-free apply if its purpose is for litigation associated with an injury.
Example: report for injury compensation
Southside Lawyers act for Jason, who was injured in a car accident. Jason is seeking compensation from the other driver for the injuries suffered. Southside Lawyers ask Jason to visit his general practitioner, Dr Cliffe, to have an examination to assess the extent of his injuries for the purposes of litigation.
Dr Cliffe examines Jason and provides a report, which Jason gives to Southside lawyers. A Medicare benefit is not payable for the examination or the report.
The examination and report by Dr Cliffe are not GST-free because both:
- a Medicare benefit is not payable
- the report is not a natural part of any GST-free medical service that Dr Cliffe supplies to Jason.
Medical report supplied to another medical practitioner
In some circumstances, a medical report sent to another practitioner can be GST-free.
Example: report supplied to another medical practitioner
Gordon is a resident of the United States of America and is not entitled to Medicare benefits.
While Gordon is visiting Australia he goes to a local general practitioner, Dr Hannaford, as he is suffering from an illness. Dr Hannaford refers Gordon to Dr Jackson for a pathology test. Gordon engages Dr Jackson to supply the pathology services. The pathology test would be generally accepted in the medical profession as being necessary for Gordon’s appropriate treatment.
Dr Jackson’s nurse takes blood for examination. Dr Jackson reviews the results and provides his written conclusions, which are sent electronically to Dr Hannaford.
Even though the report is sent electronically by Dr Jackson to Dr Hannaford, Gordon is the recipient of the supply, as he engaged Dr Jackson to supply the pathology services.
The pathology service and the written conclusions are GST-free because they are a natural part of the performance of the GST-free medical service. It does not matter that a Medicare benefit is not payable.
End of example