Download GST and music therapy

GST and music therapy
ATO ID 2002/909
FOI status: may be released
Status of this decision: Decision Current
ATO Interpretative Decision
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summarising the application of the relevant provision of the law to complex circumstances. If you
rely on this decision and your circumstances are materially the same as those described, and the
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However, interest could be payable in any event depending on the circumstances of the case. If the
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Goods and services tax
GST and music therapy
Issue
Is the entity, a music therapist, making a GST-free supply under Subdivision 38-B of the A
New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies music
therapy to a patient?
Decision
No, the entity is not making a GST-free supply under Subdivision 38-B of the GST Act when it
supplies music therapy to a patient. The entity is making a taxable supply under section 9-5 of
the GST Act.
Facts
The entity is a music therapist. The entity supplies music therapy to a patient.
There is no medicare benefit payable under Part II of the Health Insurance Act 1973 for these
particular music therapy services.
The entity is not a medical practitioner or an approved pathology practitioner for the purposes
of the Health Insurance Act. The entity does not supply its services on behalf of a medical
practitioner or an approved pathology practitioner.
The entity is not a practitioner of any of the other health services listed in the table in
subsection 38-10(1) of the GST Act.
The entity is registered for goods and services tax (GST). The supply satisfies all of the other
positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Under Subdivision 38-B of the GST Act, certain health services are GST-free. Of relevance in
determining the GST status of the entity's supply of music therapy, is section 38-7 of the GST
Act which deals with the supply of medical services; and section 38-10 of the GST Act which
deals with the supply of other health services.
Under subsection 38-7(1) of the GST Act, a supply of a 'medical service' is GST-free. A
'medical service' is defined under section 195-1 of the GST Act to mean:

a service for which a medicare benefit is payable under Part II of the Health
Insurance Act 1973 ; or

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.
In this case, there is no medicare benefit payable under Part II of the Health Insurance Act
1973 . As such, for the supply of music therapy to be a GST-free medical service, it must
satisfy the second limb of the definition of 'medical service' in section 195-1 of the GST Act.
Part of that definition requires that the service be supplied by or on behalf of a medical
practitioner or approved pathology practitioner.
The terms 'medical practitioner' and 'approved pathology practitioner' are separately defined
under section 195-1 of the GST Act to mean a person who is, for the purposes of the Health
Insurance Act 1973 , a medical practitioner or an approved pathology practitioner.
The entity is neither a medical practitioner nor an approved pathology practitioner for the
purposes of the Health Insurance Act 1973 ; nor does it supply its services on behalf of a
person who is a medical practitioner or an approved pathology practitioner for the purposes of
the Health Insurance Act 1973 . Therefore, the music therapy supplied by the entity does not
satisfy the second limb of the definition in section 195-1 of the GST Act and accordingly is not
a GST-free medical service under subsection 38-7(1) of the GST Act.
Under subsection 38-10(1) of the GST Act, an entity makes a GST-free supply of other health
services if:

it provides a service of a kind specified in the table in subsection 38-10(1) of
the GST Act or of a kind specified in the A New Tax System (Goods and
Services Tax) Regulations 1999 (GST Regulations) (paragraph 38-10(1)(a)
of the GST Act); and

the entity is a recognised professional in relation to the supply of services of
that kind (paragraph 38-10(1)(b) of the GST Act); and

the supply would generally be accepted, in the profession associated with
supplying services of that kind, as being necessary for the appropriate
treatment of the recipient of the supply (paragraph 38-10(1)(c) of the GST
Act).
Music therapy is not listed in the table in subsection 38-10(1) of the GST Act or in the GST
Regulations. Therefore, a supply of music therapy services, in itself, does not satisfy the
requirement in paragraph 38-10(1)(a) of the GST Act.
However, the requirement in paragraph 38-10(1)(a) of the GST Act may be satisfied where
the supplier is supplying one of the services listed in the table in subsection 38-10(1) of the
GST Act, and an unlisted service such as the music therapy is considered to be a standard
technique or component of that listed service. (For example, psychology is a service listed in
the table in subsection 38-10(1) of the GST Act for which the unlisted service of music
therapy may be considered a standard technique or component of the supply).
In this case, the entity is not supplying any of the services listed in the table in subsection 3810(1) of the GST Act. Therefore, the requirement in paragraph 38-10(1)(a) of the GST Act is
not satisfied and the supply is not GST-free under subsection 38-10(1) of the GST Act.
As such, the entity is not making a GST-free supply of a medical service or another health
service under Subdivision 38-B of the GST Act when it supplies music therapy to a patient.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5
of the GST Act. Furthermore, the supply is not GST-free under any of the other provisions in
Division 38 of the GST Act nor is it input taxed under Division 40 of the GST Act. Therefore,
the entity is making a taxable supply under section 9-5 of the GST Act when it supplies music
therapy to a patient.
Date of decision: 3 April 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
Subdivision 38-B
section 38-7
subsection 38-7(1)
section 38-10
subsection 38-10(1)
paragraph 38-10(1)(a)
paragraph 38-10(1)(b)
paragraph 38-10(1)(c)
Division 40
section 195-1
Health Insurance Act 1973
Part II
A New Tax System (Goods and Services Tax) Regulations 1999
1
Other References
Health Issues Log - Issue 2.a.2
Keywords
Goods and services tax
GST free
GST health
Section 38-7 - medical services
Section 38-10 - other health services
GST supplies & acquisitions
Taxable supply
Date of publication: 16 September 2002
ISSN: 1445-2782
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