ATO Interpretative Decision
ATO ID 2001/602
Goods and Services Tax
GST and muscle stimulation machineFOI status: may be released
Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a supplier of medical aids and appliances, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a muscle stimulation machine?
Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies the muscle stimulation machine. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of medical aids and appliances. The entity supplies a muscle stimulation machine. The machine is primarily used on patients who have suffered a stroke and whose muscles require massaging and stimulation to prevent atrophication.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Under subsection 38-45(1) of the GST Act, the supply of a medical aid and appliance is GST-free where the medical aid or appliance:
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- is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 2019(GST Regulations);
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- is specifically designed for people with an illness or disability; and
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- is not widely used by people without an illness or disability.
The muscle stimulation machine is not specifically listed in Schedule 3 or specified in the GST Regulations. However item 141 in Schedule 3 (Item 141) lists the 'transcutaneous nerve stimulator machine' (TENS machine).
The phrase 'transcutaneous nerve stimulator machine' is not defined in the GST Act. When a word or phrase is not defined, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning. When a word or phrase has a technical meaning it is necessary to determine the meaning by reference to the industry in which that word or phrase relates. Given that this phrase appears in the context of a list of medical aids and appliances, it is considered to have a special or technical meaning.
After consultation with the health industry it is considered that a TENS machine is a device that is used for the purpose of pain relief by preventing the passage of pain impulses to the brain. The TENS machine introduces pulses of low-voltage electricity into tissues for the relief of pain. A TENS machine will only include those devices which were developed primarily for the purposes of pain relief.
This is contrasted with the operation of the muscle stimulation machine where there is no input of electricity or chemicals into the body. As the muscle stimulation machine is designed for and marketed as a device to prevent muscle atrophication and not for pain relief and management, it is not a TENS machine for the purpose of Item 141. Therefore, the supply is not GST-free under subsection 38-45(1) of the GST Act.
The entity is registered for GST and the 'supply' satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies a muscle stimulation machine.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 9 April 2019 | Throughout | Updated A New Tax System (Goods and Services Tax) Regulations 1999 to A New Tax System (Goods and Services Tax) Regulations 2019. |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
subsection 38-45(1)
Division 40
Schedule 3
Schedule 3 table item 141
The Regulations
Keywords
Goods & Services Tax
GST-free
GST health
Section 38-45 - medical aids & appliances
ISSN: 1445-2782