GST for dental practices

The GST-free rule for dental

Under the ATO's rules for health services, a dental service is GST-free when:

• dental is a listed health service (it is);
• it's performed by a recognised dental professional (or, in some cases, their assistant); and
• it's "generally accepted in that listed health profession as being necessary for the appropriate treatment" of the patient.

That covers most of what a dental clinic does day to day: exams, cleans, fillings, extractions, crowns, root canals, dentures and orthodontic treatment that's clinically needed.

Who bills the patient

Whether GST applies also depends on who is billing whom.

• Dentist bills the patient directly: the treatment is GST-free.
• Clinic or service entity bills the patient: GST applies.
• Dentist invoices the clinic or service entity: GST applies. The ATO's view is that health services supplied to a third party, rather than the patient, generally aren't GST-free.

Your service and facilities agreement and the way billing is set up in your practice software decide which of these you're in. If they don't match, that's worth fixing.

Registering for GST

It's easy to assume that GST-free income means you don't need to register. That's not how it works. Your GST turnover includes GST-free sales, so if your practice's or your own GST turnover is $75,000 or more, you must register. In our experience associates should be registered too, and we set it up with your ABN.

Cosmetic work and teeth whitening

The line is clinical necessity. If a service isn't clinically necessary and is purely cosmetic, it's taxable and GST applies.

Teeth whitening is where clinics most often ask. Whitening is GST-free only when it's clinically necessary as part of appropriate treatment, and the clinical reason is documented. Purely cosmetic whitening is taxable.

Products and kits

Take-home whitening kits and other retail products, such as toothbrushes and mouthguards sold over the counter, are generally taxable goods. Charge GST on them and report it in your BAS.

Setting it up in your practice software

1. Mark each item number or service as GST-free or taxable when you set it up, not at the counter.
2. Set retail products and take-home kits as taxable.
3. For whitening, use separate items for clinically necessary and cosmetic whitening, so the right GST applies automatically.
4. Check your BAS reports match what the software is charging.

Not sure how your items are set up? We can review them with you. If you're contracting as an associate, see associate dentists for ABN and GST registration.