As a doctor or allied health professional, you know the importance of minimising errors.
But when it comes to the Business Activity Statement (BAS), many health professionals are making errors with GST and exposing themselves to unnecessary risk with the ATO.
GST basics for Medical Services
Medical services provided to patients where a Medicare benefit is payable are GST-free.
Services provided to third parties may require GST to be charged. This generally occurs when the services don’t directly relate to treatment of the patient, such as writing medical reports for insurance companies or solicitors.
GST basics for Allied Health Services
Patient treatments from other recognised allied health services are GST-free if they are a listed health service and are considered part of the necessary and appropriate treatment of the patient. This information is available on the ATO website.
Operating a health business using a service agreement
Are you working in a practice with a service agreement? This agreement will provide details on whether you are invoicing the patient or invoicing the practice as a contractor.
Invoicing the patient for medical services is GST-free. However, invoicing the practice for working as a contract doctor is subject to GST.
Without fully understanding your service agreement, you may be at risk of owing the ATO money.
Check your books for GST errors
Do you fully understand whether you should be charging or claiming GST?
It can get quite complicated. Below we look at the most common scenarios and the correct GST treatment in the health sector, so that you can identify where you may be going wrong.
|The most common GST errors with income||GST|
|Providing treatments to patients for workers’ compensation.||No|
|Invoicing for medical reports written for courts, solicitors, and insurance companies.||Yes|
|Providing patient treatment and invoicing an insurance company if the services provided have a Medicare benefit payable.||No|
|Service agreement states you are contractor providing services to the medical practice and you should be charging GST.||Yes|
|Lump sum incentives received from practices to work for an agreed period.||Yes|
|Government Practice Incentive payments (PIPs).||No|
|Government Service Incentive payments (SIPs).||No|
|Rural Loading payments.||No|
|The most common GST errors with expenses||GST|
|Subscriptions and memberships to overseas professional organisations.||No|
|Motor vehicle registration .||No|
|Motor vehicle expenses when claiming cents per kilometre in your tax return.||No|
|Claiming GST on 100% of expenses when the expense is part private (the GST should be apportioned based on the business-use percentage).||Yes||No|
|Overseas conferences and overseas travel.||No|
|Personal insurances such as income protection and life insurance.||No|
When processing your bookkeeping transactions, it is necessary to review every invoice to determine if you have been charged GST. For example, nurses’ charges included in services fees should be GST-free.
Claiming GST incorrectly will result in having to pay back the GST, in the event of an audit.
Are you managing GST correctly as a health professional? If you need further advice on getting it right, contact us here.