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GST Exemption

PACFA wrote to the Treasurer in 2011 requesting GST exemption for counsellors and psychotherapists. The then Assistant Treasurer, Bill Shorten, responded that the Government would not consider amending the GST legislation but that PACFA could seek a Private Ruling from the Australian Taxation Office that counsellors and psychotherapists are GST- exempt.

PACFA sought legal advice on whether we would be successful in an application for a Private Ruling and the advice was that such that an application is very likely to be unsuccessful.  On the basis of this advice, PACFA was not able to take this campaign any further.

PACFA could mount a future campaign for amendment of the legislation, however all States would have to agree to amend the legislation and it would be difficult to get the States to agree because the change would result in a loss in GST revenue. The best opportunity to revisit this issue would be if a major review of GST were to take place in the future.

The legal Issues

The relevant provision of the GST legislation is subsection 38 – 10 (1). Under this provision, some “other health services” are considered a “supply” for GST purposes if:

(a)  It is a service of a kind specified in the table in this subsection or of a kind specified in the regulations and

(b)  The supplier is a recognised professional in relation to the supply of services of that kind and

(c)  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

Services listed in the table are:

  • Aboriginal or Torres Strait Islander Health
  • Acupuncture
  • Audiology audiometry
  • Chiropody
  • Chiropractice
  • Dental
  • Dietary
  • Herbal Medicine (inc.traditional Chinese herbal medicine)
  • Naturopathy
  • Nursing
  • Occupational Therapy
  • Optometry
  • Osteopathy
  • Paramedical
  • Pharmacy
  • Psychology
  • Physiotherapy
  • Podiatry
  • Speech pathology
  • Speech therapy
  • Social Work

A person is a recognised professional  in relation to the supply of a service of a kind specified in the table in subsection 38 – 10 (1), if:

a)   The service is supplied in a State or Territory in which the person has permission or approval, or is registered under a state law or a territory law prohibiting the supply of services of that kind without such permission, approval or registration, or

b)   The service is supplied in a State or Territory in which there is no State law or Territory law requiring such permission, approval or registration and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind.

Even though the self-regulation of the profession by PACFA would be sufficient to bring us within the definition, counsellors and psychotherapists would also need to be one of the services listed in s. 38-10, which we are not.  The health service must be exactly as listed (i.e. a psychologist or social worker) and it is not sufficient to provide a similar service.