Goods and services tax (GST) - the MBS and PBS

How GST applies to Medicare benefits and the Pharmaceutical Benefits Scheme.

Payments to the public

Generally, Medicare and Pharmaceutical Benefits Scheme (PBS) payments or services supplied to the public are GST free. This applies to Medicare benefits, medicines supplied under the PBS, and the 30% rebate on private health insurance.

More information about taxes borne by consumers is available from the ATO Tax Reform website.

Payments to service providers and suppliers

This section relates to programme and incentive payments made to:

  • pharmacies, pharmacists and other approved dispensers
  • radiation-oncology clinics
  • colostomy and ileostomy associations, and paraplegic and quadriplegic associations
  • wholesale medicine suppliers for the Botox and in-vitro fertilisation or gamete intra-fallopian transfer programmes
  • simplified billing agents
  • software suppliers
  • registered health care providers for the provision of National Bowel Cancer Screening Programme information

Many health services, such as Medicare and the PBS, are free from the GST. However, the Australian Taxation Office has advised that GST should apply to some payments, including some of those paid on behalf of the Department of Veterans' Affairs. Under those circumstances, the payment itself is deemed under GST law to be a 'consideration for a supply' that is, a payment for a service that you are deemed to be rendering to us or the Australian Government.

As a result, we need to collect some information from you to ensure that you continue to receive Medicare payments in full.

What suppliers and providers need to do

For your enterprise to continue to receive payments in full, you must comply with the requirements of the GST legislation. If you receive or may receive payments from us that are not GST-free, you need to give us the Australian Business Number (ABN) of the enterprise, and enter into a Recipient Created Tax Invoice Agreement with us, signed by an appropriate representative of the enterprise. You also need to advise us if you do not have an ABN, or if any of your ABN or Medicare Reference ID details change.

Provide this information to us by completing the appropriate form

Health related taxation links

  • Australian Taxation Office - the Australian Taxation Office's official website, containing information on all aspects of tax reform and GST
  • Business Entry Point - provides government information on Australian business, and covers taxation issues
  • Department of Health - deals with how the GST legislation affects health and aged care goods and services

Page last updated: 21 July 2016

This information was printed Saturday 3 December 2016 from humanservices.gov.au/health-professionals/enablers/goods-and-services-tax-gst-mbs-and-pbs It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.