ATO Interpretative Decision
ATO ID 2004/440
Goods and Services Tax
GST and the supply of prescription lenses for swimming gogglesFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 prescription lenses for swimming goggles?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies prescription lenses for swimming goggles.
Facts
The entity is a supplier of medical aids and appliances. The entity supplies prescription lenses for swimming goggles.
The lenses for the swimming goggles are ground to specification and allow people who require prescription lenses to see clearly underwater.
The prescription lenses for swimming goggles are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability.
There is no agreement between the entity and the recipient of the supply that the supply will not be treated as a GST-free supply.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 38-45(1) of GST Act, the supply of a medical aid or 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.
There are no items in Schedule 3 or the GST Regulations that specifically list prescription lenses for swimming goggles. However, item 155 in the table in Schedule 3 (Item 155) lists 'lenses for prescription spectacles'.
The term 'prescription spectacles' is not defined in the GST Act. Where a term is not defined in the GST Act, it will take on its ordinary meaning unless the term has a special or technical meaning. Where a term has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that term relates (Herbert Adams Pty Ltd v. Federal Commissioner of Taxation (1932) 47 CLR 222).
Given the context in which the term 'prescription spectacles' appears, the term is considered to have a special or technical meaning. Dorland's Medical Dictionary (2000) edition, Newman W. Dorland, WB Saunders, London, defines the word 'prescription' as a 'written direction for the preparation and administration of a remedy'. The word 'spectacles' is defined as 'a pair of lenses in a frame to assist vision'.
Accordingly, it is considered that 'prescription spectacles' are a pair of lenses in a frame provided in accordance with a prescription. Further, it is considered that the prescription must be made by an appropriately qualified person (eg an optometrist) for the purpose of remedying a sight defect.
The entity is supplying lenses prepared in accordance with a prescription to be used in swimming goggles to allow people who require prescription lenses to see clearly underwater. It needs to be determined whether the word 'goggles' fall within the meaning of the word 'spectacles'.
The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales defines 'goggles' as 'spectacles often with special rims, lenses, or sidepieces, so devised as to protect the eyes from wind, dust, water, or glare'. Therefore, the entity's swimming goggles fall within the meaning of the word 'spectacles' in Item 155.
As the entity's swimming goggles are a form of spectacles that have prescription lenses, the entity's supply of the lenses for swimming goggles is covered by Item 155.
In addition, lenses for swimming goggles are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability. Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies prescription lenses for swimming goggles.
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
subsection 38-45(1)
Schedule 3
Schedule 3 table item 155
The Regulations
Case References:
Herbert Adams Pty Ltd v. Federal Commissioner of Taxation
(1932) 47 CLR 222
ATO ID 2001/355
Other References:
Dorland's Medical Dictionary, 2000, 29th edition, Newman W. Dorland, WB Saunders, London.
The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales
Keywords
Goods and services tax
GST free
GST health
Section 38-45 - medical aids & appliances
ISSN: 1445-2782