• GST and medical aids and appliances

    The sale of medical aids and appliances may or may not be subject to GST. The following information will help you decide whether or not to charge GST on the sales of medical aids and appliances you make.

    Attention

    Terms we use

    When we say merely incidental, we are referring 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.

    For example, a hearing aid is supplied with a small brush used as an accessory to clean the hearing aid so that it performs properly. The brush represents a small part of the value of the total package. In this case, supply of the brush is not regarded as a separate part, but is merely incidental to the supply of the hearing aid.

    End of attention

    Find out more

    GSTR 2001/8External LinkGoods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts – for more information about the term 'merely incidental', refer to paragraphs 55 to 63.

    End of find out more

    Conditions to sell medical aids and appliances GST-free

    Medical aids and appliances you sell are GST-free if they meet all of the following three conditions:

    • listed in schedule 3 to the GST Act or in schedule 3 to 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 manufacture to consumer.

    Treating medical aids and appliances as taxable

    Under GST law, you can make an agreement with your supplier to treat these GST-free medical aids and appliances you purchase as taxable.

    Where this is the case, if you are registered or required to be registered for GST, you may be eligible to claim a GST credit for the GST you pay in the price of the medical aids and appliances you purchase.

    However, you may still sell these items GST-free to your customers unless you have a similar agreement with your customers that covers your supply.

    Find out more

    GST definitions: GST credits, purchases

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    Adding items to the GST Act or regulations

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

    Hiring medical aids and appliances

    If you sell medical aids and appliances that meet the conditions to be GST-free, you can also hire out those items 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 you sell that are specifically designed for a GST-free medical aid or appliance are GST-free. However, generic parts are taxable.

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

    Repairs to GST-free medical aids and appliances

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

    The following parts or labour you supply to repair GST-free medical aids or appliances are taxable:

    • parts that are not specifically designed as spare parts for the GST-free medical aid or appliance and which are not merely incidental to the supply of GST-free specifically designed spare parts  
    • consumables, such as oil or glue, used in the repair or service that are not merely incidental to the supply of GST-free specifically designed spare parts  
    • specifically designed spare parts for the GST-free medical aid or appliance that are merely 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 for the GST-free medical aid or appliance.

    Medical aids or appliances listed in an unexpected category

    Schedule 3 to the GST Act contains three columns made up of the item number, the category and the medical aid or appliance. If the meaning of the medical aid or appliance listed in the third column is unclear, you can use the category column to clarify it.

    For example, 'mammary' is listed in column two at item 84. By itself, the term 'mammary' and its purpose are unclear. The category column clarifies item 84 as mammary prostheses.

    Needles and syringes are listed at item 37 under the category of 'diabetes'. The meaning of needles and syringes is not unclear so all needles and syringes are GST-free as long as they are:

    • needles and syringes designed to be used with each other
    • specifically designed for people with an illness or disability
    • not widely used by people without an illness or disability.
      Last modified: 20 May 2014QC 16265