ATO Interpretative Decision
ATO ID 2014/21
Goods and Services Tax
GST and contoured pillowsThis 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 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 contoured pillow designed for people with head and/or neck injuries?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a contoured pillow designed for people with head and/or neck injuries.
Facts
The entity is a supplier of a contoured pillow. The contoured pillow is specifically designed for people with head and neck injuries. The contoured pillow is designed to be placed on a mattress and alter the position of the user's head and/or neck while they sleep.
The contoured pillow is 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 the 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.
Item 82 in the table in Schedule 3 (Item 82) lists 'night-time positioning equipment modifications'.
The contoured pillow is covered by item 82 because it is a product that modifies the function of a mattress, which is 'night time positioning equipment' as held by the Administrative Appeal Tribunal in Snugfit Australia Pty Ltd v. Federal Commissioner of Taxation [2013] AATA 802. The contoured pillow is designed to be placed on and used in conjunction with a mattress to alter the flat, horizontal surface of the mattress and to change the sleeping position of the user by altering the position of the user's head and neck while they sleep.
This pillow is specifically designed for people with an illness or disability as it's designed for people with head and/or neck injuries. Also, the pillow is not widely used by people without an illness or disability. Therefore, the supply of the contoured pillow is GST-free pursuant to section 38-45(1) of the GST Act.
Note: Pillows that are not specifically designed for people with an illness or disability do not satisfy subsection 38-45(1) of the GST Act. For example, a product which is designed to promote healthy posture while sleeping and prevent or reduce the risk of postural problems and neck stiffness from occurring in the future is not specifically designed for people with an illness or disability. Further, pillows (including contoured pillows) that are widely used by people without an illness or disability do not satisfy subsection 38-45(1).
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
paragraph 182-10(2)(c)
section 182-15
Schedule 3
Schedule 3 table item 66
Schedule 3 table item 82
Schedule 3 table item 87
The Regulations
Case References:
Snugfit Australia Pty Ltd v. Federal Commissioner of Taxation
[2013] AATA 802
Related Public Rulings (including Determinations)
ATO ID 2002/525 is overturned by this decision.
Keywords
Goods & services tax
GST free
GST health
section 38-45 - medical aids & appliances
supplies & acquisitions
taxable supply
ISSN: 1445-2782
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