ATO Interpretative Decision
ATO ID 2004/492
Goods and Services Tax
GST and supply of isotoner glovesFOI status: may be released
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This ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019. This ATO ID continues to apply in relation to the remade Regulations.
A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this ATO ID is available.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 isotoner gloves?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies isotoner gloves.
Facts
The entity is a supplier of medical aids and appliances. The entity supplies isotoner gloves.
The isotoner gloves are used by people with lymphoedema. The isotoner gloves are designed to compress the hands for therapeutic benefit.
The isotoner gloves 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 1999 (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.
Item 14 in the table in Schedule 3 to the GST Regulations (Item 14) lists 'compression garments'. Compression garments will be medical aids or appliances when the garments exert sufficient pressure on the wearer to be of therapeutic benefit. They are commonly used by lymphoedema and burn sufferers.
The entity supplies isotoner gloves that are used by people with lymphoedema. The isotoner gloves are designed to compress the hands for therapeutic benefit, therefore, the entity's isotoner gloves fall within the meaning of compression garments and are covered by Item 14.
In addition, isotoner gloves 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 isotoner gloves.
Date of decision: 4 July 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-45(1)
Schedule 3
Schedule 3
Schedule 3 table item 14 Related ATO Interpretative Decisions
ATO ID 2003/953
Other References:
Commonwealth of Australia 2003. GST Pharmaceutical Health Forum - Issues Register - Attachment B - Schedule 3 - Medical aids or appliances (Regulation 38-45.01). Tax Office, www.ato.gov.au
Keywords
Goods and services tax
GST free
GST health
Section 38-45 - medical aids & appliances
ISSN: 1445-2782