ATO Interpretative Decision
ATO ID 2001/282
Goods and Services Tax
GST and Non-invasive acupuncture point electric stimulatorsFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 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 non-invasive acupuncture point electric stimulators developed primarily for the treatment of smoking, obesity and stress?
Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies non-invasive acupuncture point electric stimulators developed primarily for the treatment of smoking, obesity and stress. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of medical appliances. The entity supplies a range of non-invasive acupuncture point stimulator devices.
The non-invasive acupuncture point stimulator devices are small, battery-operated units with leads connected to electrodes that are then attached to the skin. The devices have been developed primarily for the treatment of smoking, obesity and stress. They have not been developed for pain relief.
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 certain medical aids and appliances 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(Regulations); and
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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 only item of relevance to this case is item 141 in the table in Schedule 3 to the GST Act (Item 141). Item 141 lists 'transcutaneous nerve stimulator machines' (TENS machines). Non-invasive acupuncture point electric stimulators are not specified in the Regulations.
The phrase 'transcutaneous nerve stimulator machines' is not defined in the GST Act.
Generally, where a phrase is not defined in the relevant Act, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning. Where a phrase has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that phrase relates (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).
In this case, given the context in which the phrase appears (ie a list of medical aids and appliances), the phrase is considered to have a special or technical meaning.
The Concise Medical Dictionary (1998) defines 'transcutaneous electric nerve stimulation' as:
'the introduction of pulses of low-voltage electricity into tissue for the relief of pain. It is effected by means of a small portable battery-operated unit with leads connected to electrodes attached to the skin; the strength and frequency of the pulses, which prevent the passage of pain impulses to the brain, can be adjusted by the patient. TENS is used mainly for the relief of rheumatic pain; as a method of producing pain relief in labour, it is less frequently used than epidural anaesthesia (see spinal anaesthesia), which has a much wider application for pain relief in obstetrics.'
Black's Medical Dictionary (1995) defines 'transcutaneous nerve stimulation' as:
'a method of electrical stimulation that is being used for the relief of pain, including that of migraine, neuralgia and phantom limbs. Known as TENS, its mode of action appears to have some resemblance to that of acupuncture. Several controlled trials suggest that it provides at least a modicum of relief of pain after operations, thereby reducing the amount of analgesics that may be called for.'
Therefore, a TENS machine is a small portable battery-operated unit with leads connected to electrodes that are then attached to the skin. The purpose of the machine is to aid pain relief by preventing the passage of pain impulses to the brain. As such, a TENS machine will only include those devices which were developed primarily for the purpose of pain relief.
In this case, the non-invasive acupuncture point stimulator devices are small portable battery-operated units with leads connected to electrodes that are then attached to the skin. However, the devices have been developed primarily for the treatment of obesity, smoking and stress-related problems. They have not been developed for pain relief. As such, they are not TENS machines for the purposes of Item 141.
Therefore, the supply of non-invasive acupuncture point stimulator devices for the treatment of obesity, smoking and stress is not a GST-free supply 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.
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 table item 141
The Regulations
Case References:
Herbert Adams Pty Ltd v FCT
(1932) 47 CLR 222
ATO ID 2001/281
Other References:
Concise Medical Dictionary, 1998, Oxford University Press, Market House Books Ltd
Black's Medical Dictionary, 1995, 38th Edition, A & C Black, London
Keywords
Goods & services tax
GST free
GST health
Medical aids & appliances
Taxable supply
ISSN: 1445-2782
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