ATO Interpretative Decision
ATO ID 2002/39
Goods and Services Tax
GST and foot compression deviceFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a foot compression device?
Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a foot compression device. 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 is supplying a foot compression device.
The foot compression device is a single chambered intermittent compression device that consists of an inflatable foot sleeve and an electric pump.
The device stimulates the natural pumping of blood in the veins in the foot and/or calf by its frequent 'on and off' squeezing action. This results in a large volume of blood moving rapidly up the deep veins of the leg. The pressure generated by the device is between 140 - 180mmHg.
The foot compression device, through the application of this squeezing action, is used primarily to reduce the occurrence of deep vein thrombosis (DVT).
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, a 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.
The only item of relevance is item 71 in the table in Schedule 3 (Item 71), which lists 'pressure management garments and lymphoedema pumps'. The foot compression device is not specified in the GST Regulations.
The foot compression device is not a 'pressure management garment' as it is not a garment but rather an intermittent compression device with an inflatable foot sleeve.
Therefore, it needs to be determined whether the foot compression system is a lymphoedema pump.
Compression pumps used in lymphoedema treatment gently squeeze the limb to force lymph fluid, which has accumulated in the tissues, to drain from the limb through the lymphatic system.
Lymphoedema pumps are used at relatively low pressures so as not to damage the superficial lymphatic vessels, which are very small and fragile. These can be easily damaged and can be broken when a pressure of more than 60mmHg is applied.
A lymphoedema pump generally consists of an inflatable sleeve which is placed over the arm or leg, and an electric pump which slowly inflates the sleeve to a preset pressure (usually no more than 40mmHg) for a few minutes and then deflates for a few minutes in a repeated cycle. The squeezing action of a lymphoedema pump is quite slow. It may be a single chambered or sequential multi-chambered compression device.
The foot compression device is a single chamber intermittent compression device that consists of an inflatable foot sleeve and an electric pump. However, the 'on/off' squeezing action of the device is much more frequent than the squeezing action of a lymphoedema pump.
The pressure generated by the device is between 140 - 180mmHg, which is much higher than that of lymphoedema pumps that are operated at a recommended pressure of less than 40mmHg. The higher pressure and increased squeezing frequency of the foot compression device leads to large volumes of blood being pumped up the leg more rapidly than with lymphoedema pumps.
Therefore, it is considered that the foot compression device is not a lymphoedema pump, and is therefore not covered by Item 71.
As the foot compression device is not covered by Schedule 3, the supply of the device is not GST-free under subsection 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 not GST-free under any of the other provisions in Division 38, nor is it 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 the foot compression device.
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)
Schedule 3
Schedule 3 table item 71
Division 40
The Regulations
Keywords
Goods and services tax
GST free
GST health
Section 38-45 - medical aids & appliances
Taxable supply
ISSN: 1445-2782
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