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tauseef22(Newbie)Newbie
13 Nov 2022

Hi,

I work as a dentist at 3 different practices and provide dental treatments to the patients at the clinics. I have signed a services and facilities agreement contract with the practice owners. One of my practice owner who owns the clinic has said that all my earnings are GST free and I do not have to pay any GST on my earnings(this was the information provided to him by his accountant) while the other practice manager has said that they are not GST free. The invoice that they issue me at the end of the month is in the following format. 40% of the total earnings come to me and they deduct 60% of the total earnings as their share. On top of that they also deduct 10% of GST for the 60% of their share from my 40% which leaves me with only 34% of the total earnings. One of the practice owner says that I should get the entire 40% from the ATO once I lodge the BAS as my earnings are GST free while the other practice manager says that I will have to pay GST on my 40% earnings. I am very confused after hearing these responses and on doing my research I have found out that the medical and dental treatments are actually GST free as per ATO’s website. I would really appreciate if I am guided on this matter. Thanks.


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Most helpful reply

AlliATO(Community Support)Community Support
14 Nov 2022

Hi @tauseef22


When we look at GST and medical service there is a few things that need to be considered:


-         Is the medical service in the listed health service?

-         Is it appropriate treatment?

-         Who is recipient of the supply?


So, we know that dental is on the listed health service


Is the treatment necessary (appropriate) or cosmetic? Cosmetic is not GST-free


And who is the recipient of supply? This one is a bit harder. Is it the patient or is it a third party? Generally the supply to third party that is another business would not be GST-free. The question to ask here is who is paying? Business to Business (GST) or Business to patient (GST-free).


In the situation with you providing dental treatment to 3 different practices it is going to come down to who is billing the patient and who does the patient pay, your agreements with each practice should clarify this.


Where the practice charges the patient on your behalf and the patient is paying you direct then your service to them providing it is appropriate treatment would be GST-free.


If the practice bills the patient direct and the patient pays the practice, then the service you have provided is to the practice and not to the patient. Therefore GST would apply to your service, as this would be a third-party arrangement and you would report this on your BAS at G1 for total sales, provided you are registered for GST


Where the practice charges you for the use of facilities this would also have GST applied. However this would be an expense to you, and you would claim this GST on your BAS at 1B for purchases provided you are registered for GST.


Bare in mind if you’re not currently registered for GST even though dental falls under a listed health service and the supply may be GST-free, if your income threshold is $75,000 or more you will need to register for GST even if the service you provide is GST-free. 

All replies

Most helpful reply

AlliATO(Community Support)Community Support
14 Nov 2022

Hi @tauseef22


When we look at GST and medical service there is a few things that need to be considered:


-         Is the medical service in the listed health service?

-         Is it appropriate treatment?

-         Who is recipient of the supply?


So, we know that dental is on the listed health service


Is the treatment necessary (appropriate) or cosmetic? Cosmetic is not GST-free


And who is the recipient of supply? This one is a bit harder. Is it the patient or is it a third party? Generally the supply to third party that is another business would not be GST-free. The question to ask here is who is paying? Business to Business (GST) or Business to patient (GST-free).


In the situation with you providing dental treatment to 3 different practices it is going to come down to who is billing the patient and who does the patient pay, your agreements with each practice should clarify this.


Where the practice charges the patient on your behalf and the patient is paying you direct then your service to them providing it is appropriate treatment would be GST-free.


If the practice bills the patient direct and the patient pays the practice, then the service you have provided is to the practice and not to the patient. Therefore GST would apply to your service, as this would be a third-party arrangement and you would report this on your BAS at G1 for total sales, provided you are registered for GST


Where the practice charges you for the use of facilities this would also have GST applied. However this would be an expense to you, and you would claim this GST on your BAS at 1B for purchases provided you are registered for GST.


Bare in mind if you’re not currently registered for GST even though dental falls under a listed health service and the supply may be GST-free, if your income threshold is $75,000 or more you will need to register for GST even if the service you provide is GST-free. 

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Do I have to pay GST on my earnings as all the medical treatments and dental treatments are GST free | ATO Community