How will the GST apply to health services?

Post-election consultation	The treatment of health is designed to keep the public and private sectors on an equal competitive footing.
Applying the goods and services tax (GST) to health care would place the private sector, with its heavier reliance on direct fees, at a competitive disadvantage.
Most health services will be GST-free.  Moreover, providers will have lower costs with the abolition of wholesale sales tax (WST) coupled with access to GST input tax credits.
As a result of the tax package, industry costs faced by the health services sector will decline by $820 million.
The precise scope of the medical goods and services that will be GST-free will be subject to consultation following the election through the Tax Consultative Committee chaired by a distinguished Australian.
How are medical services treated?
Medical services will be GST-free if they attract a Medicare benefit or are commonly used health services, listed by the Government.  Examples of  GST-free health services are:
Health services covered by Medicare:
•	general practitioner and specialist consultations; and
•	diagnostic, surgical and therapeutic procedures (for example, ophthalmology, neurology, optometry, radiation oncology, anaesthetics, radiology, ultrasound etc) and pathology.
Other medical services that will be GST‑free include:
•	hospital charges (accommodation etc);
•	dental services;
•	optometry;
•	physiotherapy, chiropractic;
•	speech therapy;
•	occupational therapy;
•	counselling services;
•	home nursing;
•	dietary services; and
•	podiatry.	
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How will the GST apply to health services?

	Will I pay more when I go to my GP?
No.  Medical services provided by a General Practitioner will be GST-free.
Will specialists cost more?
No.  Medical services provided by specialists will also be GST-free.
Will the GST affect bulk billing?
No.  All medical services that attract a Medicare benefit will be GST-free.
Will the cost of treatment in a hospital rise?
No.  The provision of health services that attract a Medicare benefit will be GST-free whether provided through public or private hospitals.
Medicines provided in the course of hospital treatment will be GST-free.
Other common health services (eg physiotherapy, dental, optometry etc) will also be GST-free. 
Will the GST apply to hospital accommodation and food?
Accommodation, drugs, bandages and meals provided to patients by hospitals will be GST‑free.  Purchases of food from hospital gift shops will be taxable.
Will going to the physio cost more?
No.  Physiotherapy is among those commonly used health services that will be GST-free.
Will I pay more if I go to the dentist?
No.  While routine dental services do not attract a Medicare benefit, all medical services provided by a dentist will be GST-free.  As with GPs and specialists, the cost to the dentist of providing the service will be reduced by the introduction of the GST.	
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How will the GST apply to health services?

	Will I pay more at the pharmacist?
Prescription only drugs, Pharmaceutical Benefits Scheme (PBS) drugs and Repatriation PBS drugs provided on prescription will be GST-free.  For example, ventolin for asthmatics provided on prescription will be GST‑free.

Other pharmacy items will be subject to GST, but pharmacies can expect some reduction in the cost of their operations through the removal of hidden input taxes on items such as computers.
The precise scope of drugs and medicines will be subject to consultation following the election.
Will basic items like bandaids and pain killers cost more?
Small medical items such as bandaids and bandages will be subject to the GST and can be expected to rise in price.  Pain killers purchased at the supermarket or chemist without prescription will also be subject to GST.
Will alternative health practitioners (such as aromatherapists) be subject to GST?

Medical services provided by alternative health practitioners will be subject to GST.  However, the alternative health practitioner will be able to claim input tax credits for any GST paid on inputs used in providing the service.
Will medical aids and appliances be taxed?
Medical and surgical aids and appliances for people with severe medical conditions and disabilities (eg artificial limbs, crutches, wheelchairs and modifications to motor vehicles) will be GST-free.
Will the GST apply to private health insurance?

Private health insurance premiums will be GST-free.  This measure will reduce the cost of providing private health insurance.	

For further information	

‘A New Tax System’  Chapter 2.
Other fact sheets:  No. 200  ‘The GST at a glance’ and No. 206  ‘GST Glossary:  What do the new terms mean?’.
The Government’s Tax Reform Website:  http://www.taxreform.gov.au
Tax Reform Information Centre:  Telephone 13 30 99