GST for allied health

Dec 18, 2020

GST or the Goods and Services Tax, is of course a 10% tax applied to most goods and services in Australia.

If you are an Australian business turning over more than $75,000 per year in taxable business activity, you must register for GST and include this in the price of your goods or services.

However! If you are running a medical or health practice, which includes many allied health practitioners, you are likely able to be exempt from GST and do not need to register, charge or claim GST.

Let’s have a look at the intricacies of GST for allied health and related medical industries.

Medical services and GST

If you run a medical service and are a registered medical practitioner, you are exempt from paying (and claiming) GST in all stages of the supply chain.

This GST exemption includes medical supplies, equipment and services. For example if you’re a registered medical professional and you buy an x-ray machine, have it installed in your clinic and then deploy it in your medical service to a patient, all stages of this process are GST exempt.

There is an important difference between ‘medical services’ and ‘health services’ which should be understood.

How is a medical service defined by the ATO for the purposes of GST?

  • 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.

Allied health and GST

Similar to medical practitioners, equipment and services, many allied health businesses and practitioners are also exempt from GST. This also means you’re exempt throughout the entire supply chain.

Although there is no recognition of the term ‘allied health’ in Australian tax guides, there exists a list of conditions and roles by which you qualify as GST exempt. These are called ‘health services’ as opposed to ‘medical services’.

You have to be very careful in classifying yourself as a GST exempt health practitioner or service as similar services do not apply – you have to be specifically named in the ATO’s list of services.

For a health service that is not defined as a medical service to be GST-free, it must be one of the following:

  • an Aboriginal or Torres Strait Islander health service
  • acupuncture
  • audiology or audiometry
  • chiropody
  • chiropractic
  • dental
  • dietary
  • herbal medicine (including traditional Chinese herbal medicine)
  • naturopathy
  • nursing
  • occupational therapy
  • optometry
  • osteopathy
  • paramedical
  • pharmacy
  • psychology
  • physiotherapy
  • podiatry
  • speech pathology
  • speech therapy
  • social work.

Again, the service you offer must be one of the listed services and cannot just be similar to one of these services.

Other considerations also apply before you can deem yourself to be GST exempt. If you belong to the above list, the final criteria is as follows:

  • Your health service is performed by a recognised health professional in that listed health service (above) or under permitted circumstances, your assistant.
  • Your health service is generally accepted as being necessary for the appropriate treatment of the recipient of the supply.

Recognised health professional

If you belong to the above health service category, you also need to be a recognised health professional. recognised health professional is a person who is registered, permitted or approved under state or territory law to provide the listed health service.

If there is no relevant state or territory law, a recognised professional is a member of a professional association that:

  • relates to the listed health service
  • has the same registration requirements nationally.

What if you don’t qualify?

If, according to the above criteria, you do not qualify for GST exemption, you must follow suit with other businesses and register for GST.

For example, if you are a fitness professional, yoga instructor or personal trainer, you cannot be classified as a health service for the purposes of GST.

In this case, as long as you are operating over the GST threshold, you will be required to do so. If you anticipate you will operate over the GST threshold within the year, you must also register.

Once you have done so, you’ll need to include GST in all sales and invoices you issue.

If you need further advice on GST for medical and health services visit the ATO here.

 

This information is general in nature. To determine the requirements for your businesses particular situation, you are urged to visit the ATO.

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