The 2011-12 Budget included a measure to amend the goods and services tax (GST) law to ensure that certain supplies made to health insurers in the course of settling health insurance claims will be GST-free.
A consultation paper relating to the policy design and implementation of the proposed changes was released on 7 June 2011. The exposure draft material has been developed taking into account comments made by stakeholders about health related supplies arising under other types of multi-party arrangements. These occur where a health care provider supplies GST-free health related goods or services to a person, and a payment is made to the health care provider by an insurer under a taxable insurance policy, workers' compensation or compulsory third party scheme or by a government entity under a health funding arrangement.
The exposure draft legislation will ensure that the supply by the health care provider paid for by an insurer or a government entity under a health funding arrangement is treated as a GST-free supply so long as the related supply from the health care provider to the insured person is a GST-free health supply.