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  • Medical aids and appliances

    Medical aids and appliances are GST-free if they meet certain conditions.

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    Conditions to be GST-free

    The sale of medical aids and appliances is GST-free if they meet all three of the following conditions:

    • listed in schedule 3 to the GST Act or in the GST regulations
    • specifically designed for people with an illness or disability
    • not widely used by people without an illness or a disability.

    Medical aids and appliances that satisfy all these conditions are GST-free at every point in the supply chain – from manufacturer to consumer.

    Legislation:

    Hiring medical aids and appliances

    If medical aids and appliances meet the conditions to be sold GST-free, they can also be hired out GST-free.

    For example, when a chemist hires a wheelchair out to a customer, they do not include GST in the rental fee.

    Spare parts

    Spare parts that are specifically designed for a GST-free medical aid or appliance are sold GST-free. However, generic parts are taxable.

    For example, a replacement wheelchair wheel that is designed with a specific hand grip is not a generic part and is sold GST-free. However, generic batteries sold for an electric wheelchair are taxable because they are not specifically designed for the wheelchair.

    Repairs to GST-free medical aids and appliances

    If a GST-free medical aid or appliance is repaired using a part that is specifically designed for it, any incidental labour or incidental parts that are not specifically designed for it are also GST-free.

    GST applies to the following parts or labour used to repair GST-free medical aids or appliances:

    • parts that are not specifically designed as spare parts for that medical aid or appliance and which are not incidental to the supply of specifically designed spare parts
    • consumables, such as oil used in the repair or service that are not incidental to the supply of specifically designed spare parts
    • specifically designed spare parts that are incidental to the supply of the labour component of the repair service (that is, where the main supply is labour)
    • the labour component of the repair service where it is not merely incidental to the supply of a specifically designed spare part.

    Incidental refers to something that is integral, ancillary or incidental to a supply that is part of a supply that does not need to be separately recognised for GST purposes.

    Example: Incidental labour and consumables

    Jeff owns a wheelchair and requires a new wheel with a hand grip. Acme Appliance Repair fits a new wheel to Jeff's wheelchair and charges $80 for the wheel. The wheel is specifically designed for use with wheelchairs. They also charge a fitting fee of $5 and charge $2 for oiling the axle.

    The labour for fitting is incidental to supply of the wheel. The fee for oiling the axle is also merely incidental to the supply of the wheel. As the wheel is a GST-free spare part the fitting and oiling are also GST-free.

    End of example

    Treating medical aids and appliances as taxable

    Under GST law, a purchaser can make an agreement with their supplier to treat GST-free medical aids and appliances as taxable. This may happen where a manufacturer supplies a range of GST-free and taxable medical aids and appliances to a retailer and they don't want to identify the GST status of every product.

    Where a purchaser makes such an agreement if they are registered or required to be registered for GST, they may be eligible to claim a GST credit for the GST paid.

    The purchaser may still sell these items GST-free to their customers.

    Supply of adjustable beds, mattresses and overlays

    An adjustable bed, mattress or overlay is GST-free only if it is:

    • specifically designed for people with an illness or disability
    • not widely used by people without an illness or disability, and
    • is listed in Schedule 3 to the GST Act or in the GST regulations.

    You will need to consider whether these products have design features and characteristics, that indicate that they are specifically designed for people with an illness or disability. Factors including where the products are predominantly sold and how they are marketed, will help to determine whether they are widely used by people without an illness or disability. More detailed guidance and practical examples are included in GSTD 2021/2 Goods and services tax: adjustable beds, pressure management mattresses and pressure management overlays.

    The Commissioner is aware of the practical difficulties you may encounter in determining the extent to which the product is used by people without an illness or disability. Appendix 1 of GSTD 2021/2 sets out a practical compliance approach to assist you in complying with the GST law.

    Supply of wound care

    Wound care products are GST-free only if they are:

    • made from alginate, hydro colloids, hydro gels, polyurethane film and polyurethane foam
    • specifically designed for people with an illness or disability, and
    • not widely used by people without an illness or disability.

    However, when wound care products are widely used in the general community by people without illnesses or disabilities, they will be a taxable supply. This may include items such as plasters that cover blisters, corns and calluses.

    Bandages and dressing supplied as part of a GST-free medical service will be GST-free.

    Example: Wound care that is a taxable supply

    Retailer Pty Ltd sells patches made from hydro colloids that are designed to prevent or cover blisters, corns and calluses. The patches are designed for use by any person with, or trying to prevent, a blister, corn or callous.

    As the patches are not specifically designed for people with an illness or disability and are widely used by people without an illness or disability, the supply of the product is a taxable supply.

    End of example

    Supply of medical aids and appliances used for treating COVID-19

    The sale of medical aids and appliances is GST-free if they meet certain conditions, including being listed in schedule 3 to the GST Act or GST regulations. GST does not apply to the following products:

    • cardiovascular appliances
    • dialysis and diabetes medical aids and appliances
    • ventilators
    • other respiratory appliances such as peak flow meters.

    GST applies to items not listed in schedule 3 to the GST Act or GST regulations. These include products such as:

    • rapid antigen COVID test kits
    • hand sanitiser
    • personal protective equipment (PPE) including disposable (face masks, gowns, and gloves) and protective eye wear in the form of goggles, glasses or visors.

    Medical aids and appliances not listed in the GST Act or regulations

    A medical aid or appliance can only be GST-free if it is listed in schedule 3 to the GST Act or the GST regulations. The ATO cannot treat a medical aid or appliance as GST-free and cannot give a ruling that a medical aid or appliance is GST-free, if it is not listed in schedule 3 to the GST Act or the GST regulations.

    Only the Australian Government – and not the ATO – can add new medical aids and appliances to schedule 3 to the GST Act or the GST regulations.

      Last modified: 30 May 2022QC 16263