1.c.3. What is the GST status of an appliance that is fitted to a person for the purpose of treatment of an illness or disability?
For source of ATO view, refer to issue 1.c of this issues register.
This question requires the consideration of sections 38-45 and 38-7 and focuses upon the supply of goods.
The goods may be GST-free pursuant to section 38-45 if they are:
- a medical aid or appliance covered by Schedule 3 or subsequent regulation, and
- the medical aid or appliance is specifically designed for people with an illness or disability, and
- the medical aid or appliance is not widely used by people without an illness or disability.
Once an item meets all of the above criteria its supply will be GST-free. The GST-free status will apply all the way down the supply chain and not only when supplied to a person who has an illness or disability. The elements do not require the recipient of the aid or appliance to use it in a particular way. An example of medical aids and appliances that are contained in Schedule 3 are heart monitors and pacemakers (Items 1 and 2 of Schedule 3).
If section 38-45 does not apply to the goods it is necessary to consider the application of section 38-7(3) which will allow the goods to be GST-free if they are supplied at the premises at which the GST-free *medical service is supplied. Additionally, the goods must be supplied at the same point in time at which the GST-free *medical service is supplied and the goods must have been either:
- customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free *medical service, or
- necessarily utilised as an integral part of the patient’s treatment required immediately during that specific attendance.