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[FAQ] VAT output on payments received by medical practitioners/practices from medical aids
- 22 March 2023
- VAT
- The Tax Faculty Tax Specialist
This article is based on tax law for the year ending 28 February 2023.
Background
I want to confirm regarding output on payments received by medical practitioners/practices from medical aids. These payments are additional to the service payment – and no invoice is raised for the service. For example, a doctor sees a patient on medical aid and charges R115 on a invoice (R15 output VAT). The medical aid then pays the doctor R126.5 consideration (being the R115 invoice and an R11.5 network participation fee). There are criteria for these fees. Do the medical aids claim input VAT on these? I have been assuming this is a deemed output VAT, so would one pay the R1.5 VAT on the R11.5 consideration received for the participation fee. I just want to confirm if am applying the correct VAT treatment on these receipts?
Answer
According to the VAT Act, there is no obligation for the supplier to provide a tax invoice for supplies under R50. As the participation fee of R11.50 is a separate supply from the doctor consultation fee of R115, if it is under R50. The remittance I assume would identify the participation fee and this should be sufficient to discharge the obligation for a receipt for the supply.
VAT Act Section 20(6) notwithstanding any other provision of this Act, a supplier shall not be required to provide a tax invoice if the total consideration for a supply is in money and does not exceed R50 (provided that the supplier shall provide the recipient with a document as is acceptable to the commissioner).