GST for psychologists – at the start it is easy. Psychology falls under other health services in the GST Act. And other health services are GST-free.
GST for Psychologists
But it isn’t as straight forward as that. Some services you provide as a psychologist are subject to GST. And if you don’t charge GST for those, you are liable for the GST you didn’t charge. So it is important to get this right.
GST-free supplies are listed in Division 38 in the “A New Tax System (Goods and Services Tax) Act 1999” (GSTA) – who on earth came up with that name. Subdivision 38-B covers Health. So that’s the area we need to focus on.
Medical services are GST-free per s38-7 GSTA, but psychology is not a medical service. It is an allied health service. However, the GST Act doesn’t use the term “allied health service”. It distinguishes between medial and other health services. And sure enough the table of other health services in s38-10 lists psychology under Item 16. So “other health service” it is.
Other health services are GST-free per s38-10 if they meet three conditions.
a) Listed as an eligible health service in table in s38-10: Tick – psychology is listed under item 16.
b) Performed by a recognised health professional (s195-1): Tick if you are registered with the PsyBA.
Psychology is a regulated profession in Australia. So any practicising psychologist needs to be registered with the Psychology Board of Australia (PsyBA), which is part of the Australian Health Practitioner Regulation Agency (AHPRA).
c) Accepted by the profession as necessary and appropriate. Tick if you follow accepted procedures and standards.
So these are the basic rules and they suggest that everything you do as a registered psychologist considered necessary and appropriate by the profession would be GST-free. But it isn’t. It is more complicated than that.
The basic rule in s38-10 always applies. But how depends on who pays you and for what.
If the patient pays you, things are straight forward. You make the supply (in GST land your service is a supply) of an other health service to the patient. And this supply is GST-free, if you meet the conditions in s38-10 GSTA.
If a third party pays you, things are more complicated. At face value you make the supply to the third party. And they don’t receive an other health service from you.
So on that basis the supply doesn’t meet the conditions in s38-10. But there are exceptions.
If Medicare pays you, the supply is GST-free. Anything covered by Medicare is GST-free per s38-15 GSTA.
If NDIS pays you, the supply is GST-free per s38-40.
If an NDIS participant pays you, the supply is GST-free if it meets the conditions in s38-38.
s38-38: A supply is GST-free if the supply: (a) … a participant’s plan is in effect …and (b) is …reasonable and necessary …and (c) is made under a written agreement, …and (d) is of a kind that the Disability Services Minister has determined in writing.
Sometimes you work under an arrangement with a doctor or surgery, where you don’t receive the full amount the patient or insurer pays but some goes to the doctor or surgery. Let’s say it is 20%, but in practice it sometimes goes up to 50%.
So the other health practitioner – let’s call him Bob – pays for the premises, outgoings , reception, admin, marketing and whatever else the surgery needs. And you pay nothing apart from the 20% and your own expenses like professional indemnity or development.
The consultation itself is GST-free as an other health service meeting the conditions in s38-10. But what about the 20% that goes to Bob or – looked at it from the opposite angle – the 80% that go to you?
If the supply is made in your name – your name is on the bill so you are the ones in whose name payment is collected – then Bob supplies facilities and administrative services to you for the 20% he charges. So of the $100 the patient or insurer pays you GST-free, $20 plus GST goes to Bob. So you pay Bob $22.
But if Bob is the one in whose name the supply is made – in whose name the payment is collected – and you just perform the service, then you supply professional services to Bob for the 80% of the fee. So of the $100 Bob collects, he has to pay you $88 ($80 plus GST) for your services.
Neither the supply of facilities and administrative services nor the supply of professional services is an other health service that falls under s38-10. So in either case the supply between you and Bob is subject to GST.
Workers Compensation and Insurance
If a workers compensation scheme or an insurer pays you to provide a supply to an individual, the supply is usually GST-free because the underlying supply of other health services to the patient is GST-free. But there are a few exceptions.
When a patient is obligated to attend a consultation, the ATO regards the party requiring attendance – for example an insurance company, a lawyer or a court – as the recipient of the service. And that recipient is not receiving a medical or other health service, hence the consultation is subject to GST.
The same reasoning applies to the writing of reports. If a psychologist writes a report for a third party about the patient, the recipient of the service is the third party and not the patient. And this third party doesn’t receive a medical or health service, so the fee for writing the report is subject to GST.
A medical report is only GST-free where a Medicare benefit is payable for writing the report.
The big question mark is travel to and from consultations. When a psychologist travels to see a client at their work place or at home, is this a GST-free service or subject to GST? Does it matter whether a patient is capable of travel or not? To the best of our knowledge there is no private or public ruling on this question.
The ATO is currently looking at an application for a private ruling regarding travel by a psychologist. So we will update this post in due course.
Whether treatment takes place in an individual session or a group therapy session doesn’t affect GST. A group therapy session is GST-free per ATO ID 2001/39 as long as the session meets the conditions in s38-10(1) GSTA.
Psychologists are allied health providers, but the GST Act doesn’t use the term “Allied Health”. Instead, the Act classifies psychology as an other health service.
Allied Health is a relatively new term without a universally accepted definition. But everybody seems to agree that allied health professionals are not doctors or dentists, but provide direct patient care and specialised support.
Examples are podiatry, physiotherapy, chiropractice and osteopathy, audiology, speech pathology and music therapy, occupational therapy and rehabilitation counselling, optometry and orthoptics, sonography and genetic counselling and of course psychology.
Last Updated on 17 September 2018