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Goods and Services Tax (GST) charged to Medicare patient claim accounts 011-43010110

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This document outlines the process to follow when the Goods and Services Tax (GST) is charged to Medicare patient claims. The GST is a broad-based tax of 10 per cent on most goods, services and other items sold or consumed in Australia.

Government intent

A New Tax System (Goods and Services Tax) Act 1998 legislates how the GST is applied and specifies the goods and services subject to GST and those that are GST-free (exempt).

In general, health services are GST-free if the service is 'generally accepted in the medical profession as being necessary for the appropriate treatment' of the patient. Examples of GST-free health services include:

  • health services covered by Medicare
  • general practitioner and specialist consultations
  • diagnostic, surgical and therapeutic procedures (for example, opthalmology, neurology, optometry, radiation oncology, anaesthetics, radiology, ultrasound) and pathology

GST-free Medicare services

Medical services are GST-free if they are provided by a health professional and the Medicare service meets the Medicare Benefits Schedule (MBS) criteria and a Medicare benefit is payable.

GST charged to Medicare patient claim account

If a Medicare benefit is payable for a medical service, Australian taxation law states that these services are GST-free. The References page contains a link to the legislation.

If a claimant provides a Medicare account or receipt for a service that has a Medicare benefit payable and that account or receipt includes a charged amount for GST, the claimant can seek reimbursement of the GST amount from the health professional.

If a claimant provides a Medicare patient claim account or receipt that includes GST, the Service Officer can either:

  • Process the claim with a new charge amount, deducting the GST amount from the original charge amount, then provide the claimant with a copy of the account or receipt and a letter advising Medicare services are GST free (see Resources page for a link). The claimant would then have the opportunity to contact the health professional and request a refund for the GST charged amount
  • Before processing the claim, contact the health professional to confirm the Medicare service and the correct charge amount, notating the amended information on a VG4 or sticky note
  • If the claimant attends a service centre, offer to not process the Medicare claim and suggest they could consider returning to their health professional for an amended Medicare account without GST charged. If the claimant agrees with this option, give them the original Medicare account or receipt

The Resources page contains a link to:

  • the Australian Taxation Office (ATO) website for information about the GST and health (including medical services), and
  • a letter to advise that Medicare services are GST free

Account and receipt documents for Medicare claims processing