ATO Interpretative Decision
ATO ID 2001/708
Goods and Services Tax
GST and supply of an external tissue expander machine to a plastic surgeonFOI 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ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019.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.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 goods, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act), when it sells an external tissue expander machine to a plastic surgeon?
Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it sells an external tissue expander machine to a plastic surgeon. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of medical goods. The entity sells an external tissue expander machine to a plastic surgeon.
The external tissue expander machine works by applying external suction pressure to lift and gradually increase breast tissue over a long period of time. The machine is worn externally and held in place with a sports bra.
The external tissue expander machine is not associated with mammary prostheses, but rather is used as an alternative to mammary prostheses. The machine is not used for reconstructive purposes, for example, it is not related to breast reconstruction following a mastectomy.
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 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 & Services Tax) Regulations 1999 (GST 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.
Item 84 in the table in Schedule 3 (Item 84) lists 'mammary'. 'Mammary' is not defined in the GST Act and therefore it is given its ordinary meaning. The Macquarie Dictionary (1997) defines 'mammary' as 'of or relating to the mamma or breast'.
It is considered that it is not possible to supply a 'mammary' and, as such, it is unclear what should be included under this item. Therefore section 182-15 of the GST Act, pursuant to paragraph 182-10(2)(c) of the GST Act, can be relied on because the meaning of the item is ambiguous. Under section 182-15 of the GST Act, the second column in the table in Schedule 3 may be considered when determining the meaning of Item 84.
'Mammary' is listed in Schedule 3 under the second column heading of 'Mobility of people with disabilities - physical: prostheses'. Therefore, it is considered that the meaning of 'mammary' in Item 84 is intended to be restricted to mammary prostheses.
The external tissue expander machine is not a mammary prosthesis. It is an alternative to a mammary prosthesis. Therefore, an external tissue expander machine is not covered by Item 84.
Item 15 of Schedule 3 to the GST Regulations (Item 15) specifies 'supplements and aids associated with mammary prostheses'. In this case, the external tissue expander machine is an alternative to a mammary prosthesis and is not a supplement or aid associated with mammary prostheses. Therefore, the external tissue expander machine is not covered by Item 15.
As the supply of an external tissue machine is not covered by the items discussed above and is not covered by any other items in Schedule 3 of the GST Act nor specified in the GST Regulations, the requirements of subsection 38-45(1) of the GST Act are not satisfied. Consequently, the supply is not GST-free under section 38-45(1) of the GST Act.
The entity is registered for GST and the supply meets 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 sells an external tissue expander machine to a plastic surgeon.
Date of decision: 17 October 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
subsection 38-45(1)
Division 40
section 182-15
Schedule 3
Schedule 3 table item 84
Schedule 3
Schedule 3 table item 15
Other References:
The Macquarie Dictionary, 1997, 3rd Edition, The Macquarie Library Pty Ltd, New South Wales
Keywords
Goods & services tax
GST-free
GST health
Section 38-45 - medical aids & appliances
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782
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