South Australian Wally Schmid upset after being charged GST on wife’s alcohol rehab bill

Charging GST on rehabilitation services for alcohol and drug addiction has come under fire after an Aussie couple were shocked to receive massive bill.  

Australians trying to recover from alcohol and drug addiction are being whacked with massive GST bills even though health services are meant to be exempt from the tariff.

There are already long wait times to access public rehabilitation and the tax grab is now making the faster, private rehabilitation services financially prohibitive.

Adelaide man Wally Schmid borrowed $66,000 to pay for private rehabilitation for his wife Christine who became an alcoholic. To his shock, 10 per cent of that bill — $6000 — was the GST component.

Christine had tried to access care in the public system for more than 12 months but wait lists were long and the length of treatment was too short to make a serious difference in addiction, he said.

“When an addict reaches out for help it is really important that they can receive it as soon as possible,” he said.

“Having utilised private facilities, (it) would have saved the public system quite a bit of money as well as making a position available for someone else who was unable to self fund.”

Christine and Wally Schmid in Murray Bridge, where they’ve been charged GST on a rehabilitation treatment. Picture: Matt Loxton

His local MP Tony Pasin asked the Treasurer Jim Chalmers for an explanation about the GST charge. It took 10 months for him to receive a reply, which went on to blame the states for the tax.

While detox and rehab were important services, Mr Chalmers’ office wrote, “the GST operates most efficiently when applied to as broad a range of goods and services as possible”.

“Limiting the number of exemptions helps to minimise complexity in the GST system.”

Under Commonwealth legislation and the Intergovernmental Agreement on Federal Financial Relations, changing the GST treatment of services such as detox rehabilitation, would require the unanimous support of the states and territories, his office said.

A spokesman for Mr Chalmers told News Corp “whether or not particular drug or alcohol rehabilitation services are GST free depends on the circumstances”.

A medical service is only GST free when it is:

• a service for which a Medicare benefit is payable, or

• any other service supplied by or on behalf of a medical practitioner or approved pathology practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

Chief executive of the Network of Alcohol and Other Drugs Agencies (NSW) Robert Stirling said people using not for profit drug treatment services did not have to pay GST.

“Not for profit services don’t charge, they may take a person’s welfare benefit for food and accommodation but there is no GST,” he said.

Tony Pasin, Liberal Party Member for the federal seat of Barker in South Australia. Picture Supplied

Mr Pasin said: “political will is required to amend the GST implications on private rehabilitation”.

“Accessing residential rehabilitation services in the public system is becoming harder as State and Territories, withdraw from service provision. The cost is then shifted onto patients who, are not only required to pay out of pocket for the service but slugged with an additional 10 per cent government-imposed tax, the revenue from which is not flowing back to public AOD services.”

Australian Institute of Health and Welfare data shows in 2020-21 the number of alcohol treatment services provided was at its highest in a decade, and had increased by 41 per cent since 2012-2013 (from 162,362 to 242,980).

“My wife is a good person who fell victim to a very in your face and legal drug,” Mr Schmid said.

“The government receives a massive amount of revenue from alcohol sales but how much is returned to rehabilitation services?”

“Unfortunately there seems to be a lack of interest in drug and alcohol rehabilitation probably due to the stigma,” he said.

Originally published as South Australian Wally Schmid upset after being charged GST on wife’s alcohol rehab bill