Is a psychology medico-legal report GST free?

The short answer

Usually no. A psychology medico-legal report prepared for a lawyer, court, tribunal or employer is generally subject to GST. That is because GST-free health services under section 38-10 of the GST Act must be for the appropriate treatment of the recipient of the supply. Narrow exceptions apply to reports supplied to insurers, compulsory third party scheme operators and government agencies.

Sources
A New Tax System (Goods and Services Tax) Act 1999 (Cth), sections 38-10 and 38-60
Australian Taxation Office, GST and health, Other health services
Australian Taxation Office, GST and health, Supply of services through a third party

Why treatment is the test

Psychology is one of the listed health services in section 38-10 of A New Tax System (Goods and Services Tax) Act 1999. A supply is GST-free only if it is made by a recognised professional and is generally accepted in the profession as necessary for the appropriate treatment of the recipient of the supply. A medico-legal report is different. Its purpose is to inform a legal claim, a court, a tribunal or an employer, not to treat the person. The recipient of the supply is normally the lawyer or the body commissioning the report, not the patient. The ATO treats these reports as taxable, so a GST-registered psychologist charges GST on the fee.

The section 38-60 exceptions

Section 38-60 changes the answer for some third parties. A supply to an insurer settling a claim under an insurance policy, to a compulsory third party scheme operator, or to an Australian government agency is GST-free if the underlying service would have been GST-free had it been supplied to the patient. This can cover treatment progress reports requested by a workers compensation or motor accident insurer. It does not rescue an independent assessment commissioned by a lawyer to value a claim, because that service was never treatment. The supplier and the third party can also agree in writing to treat such supplies as taxable.

Common situations for psychologists

A report to a family court about parenting capacity, an expert opinion for a personal injury lawyer, a fitness for duty assessment ordered by an employer, and a capacity assessment for a guardianship tribunal are all taxable. A letter to a client's GP summarising treatment is GST-free, because it is part of caring for the client. A treatment progress report to a workers compensation insurer that is funding the client's therapy usually falls under section 38-60 and is GST-free. A report the client asks you to write for their own use, such as a summary for a school, is generally GST-free where it supports their treatment, but becomes taxable if the school contracts and pays for it.

What to do in practice

Before you invoice, identify who requested the report, who receives it and what it is for. If it is treatment of your client, it is GST-free. If it is an assessment for a legal or employment purpose, add GST if you are registered. Registration is compulsory once your GST turnover reaches the threshold, and medico-legal income counts towards it. Workers compensation and motor accident schemes are run by the states and often publish fee orders that state whether GST applies, so check the scheme in your state. When the position is unclear, ask the ATO or a tax adviser and keep a note of your reasoning.

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