GST and Medicare Australia payments
As a health-related provider or supplier, you want to ensure that your enterprise continues to receive payments in full from Medicare Australia. To achieve this, you must comply with the requirements of the GST Legislation. This information sheet outlines what you need to do to comply.
If you receive or may receive payments from Medicare Australia that are not GST-free you need to:
- give Medicare Australia the Australian Business Number (ABN) of the enterprise; and
- enter into a Recipient Created Tax Invoice (RCTI) Agreement with Medicare Australia, signed by an appropriate representative of the enterprise.
Why Medicare Australia needs your ABN
GST affects some payments Medicare Australia makes
While many health-related supplies such as services under Medicare and the Pharmaceutical Benefits Scheme are GST-free, some payments Medicare Australia makes are not GST-free.
Payments made by Medicare Australia currently not GST-free are listed on the schedule to this fact sheet, Medicare Australia payments subject to GST.
If Medicare Australia makes a payment that is not GST-free and does not have the enterprise's ABN, Medicare Australia may be required to withhold 46.5% of the total payment (referred to as “No ABN’ withholding), This withheld amount is remitted to the Australian Taxation Office (ATO). Exceptions where withholding will not apply include:
- if a local governing body provides the supply; or
- where the total payment for the supply does not exceed $75 (excluding GST).
( Please note: tax exempt organisations must send Medicare Australia evidence of their exempt status and supply their ABN as detailed in this information sheet.)
What ABN(s) do I need to give to Medicare Australia?
The ABN(s) Medicare Australia needs from you are the ones that align with:
- the entities that receive payments from Medicare Australia; and
- the identifiers Medicare Australia uses (Medicare Australia reference ID and type of payment) to make the payments.
In other words, to administer payments under the GST Legislation, Medicare Australia needs to be able to associate an ABN with:
- each type of payment it makes to an enterprise (such as payments for immunisation encounter information made under the Australian Childhood Immunisation Register, service incentive payments made under the GP Immunisation Incentives Scheme, allowance payments for rural pharmacies etc); and
- the Medicare Australia reference ID (such as a provider number, practice number, pharmacy approval number, contract number etc) that relates to each type of payment.
For example, if a pharmacy receives payments from Medicare Australia under the rural pharmacy maintenance allowance, as well as under the nursing homes medication review payment system, the pharmacy needs to advise Medicare Australia of the ABN that relates to each of these payments (whether one ABN applies to both payments or a different ABN (s)applies to each payment) and the Medicare Australia reference ID that relates to each payment (such as the pharmacy approval number or contract number).
How do I notify Medicare Australia of the relevant ABN(s)?
You should provide your ABN(s) to Medicare Australia by completing the form:
You will need to complete a separate form for each ABN.
If you have already notified Medicare Australia of your ABN, and the details have changed, please complete the form:
Entering into a Recipient Created Tax Invoice (RCTI) Agreement with Medicare Australia
For payments over $75 (excluding GST), the supplier of a taxable supply is required to issue the recipient with a Tax Invoice.
In most business situations the supplier determines the value or the price of the supply and calculates the GST. However, Medicare Australia recognises that for many of its payments, Medicare Australia as the payer actually determines the value of the supply.
The legislation allows for Medicare Australia, as the recipient of the supply, to take responsibility for issuing a tax invoice on behalf of enterprises that receive Medicare Australia payments. For Medicare Australia to issue these tax invoices there must be a Recipient Created Tax Invoice Agreement between Medicare Australia and the enterprise. The Agreement authorises Medicare Australia, on behalf of the enterprise, to issue RCTIs for supplies associated with Medicare Australia payments. A person authorised to sign on behalf of the enterprise should sign the RCTI Agreement.
Before Medicare Australia and the enterprise can enter into an RCTI Agreement the enterprise must be registered for GST. The "Conditions of the Agreement" are detailed in "Part 8 RCTI Agreement" of the Notification of ABN and Medicare Australia reference IDs for tax treatment purposes form.
Medicare Australia recommends that all enterprises enter into an RCTI Agreement with Medicare Australia if they receive (or could receive in the future) Medicare Australia payments that are not GST-free.
If an enterprise indicates it is registered for GST on the ABN notification form but does not sign the RCTI Agreement, Medicare Australia will not pay GST until it receives a properly constructed Tax Invoice.
Should I register for GST?
If your enterprise's turnover exceeds $75 000 ($150 000 for non-profit bodies) you must register for GST. If your turnover is less than this amount, you can still choose to register for GST. You need to indicate if you are registered for GST on the Medicare Australia ABN notification form. For more information on GST registration please contact the ATO.
Medicare Australia's compliance with the GST Legislation
Medicare Australia is registered for GST. Its ABN is 75 174 030 967.
Medicare Australia will continue to make payments as it does now provided it has:
- the ABN details that relate to all the payments you receive that are not GST-free; and
- the enterprise's signed RCTI Agreement related to payments that are not GST-free.
Where Medicare Australia supplies a product or service, Medicare Australia will issue a Tax Invoice.
How to return your completed forms
Please return your completed ABN notification form by:
- freefax to 1800 069 288 or
- mail to GST Program, GPO Box 2956, Adelaide SA 5001
Additional copies of the forms can be printed copies from this website,or call Medicare Australia's GST hotline on 1800 653 629 (freecall).
For further information
on ABN(s) and the new tax system
- visit the ATO website
- call the ATO Reform on 13 24 78 or
- contact your tax agent or financial adviser.
on Medicare Australia payments, ABN notification and RCTI Agreements
- see Does GST affect your Medicare Australia payments?, and helpful tax links
- call the Medicare Australia GST hotline on 1800 653 629 (freecall)
- freefax your enquiry to 1800 069 288 or
- write to the GST Program, Medicare Australia, GPO Box 2956, Adelaide SA 5001.
Last updated: 12 August, 2011