Edited version of private ruling

Authorisation Number: 1011550642840

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Ruling

Subject: GST and medical aids and appliances

Are the following products supplied by you, GST-free supplies under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):

· Body pad, and

· Head pad?

Yes. The supply of the body pad product is a GST-free supply.

No. The supply of the head pad product is not a GST-free supply. It is a taxable supply.

Relevant facts and circumstances

You (and entity in Australia) are registered for Goods and Services Tax (GST).

You are a supplier/distributor for various brands of equipment to the Health Industry.

You do not have an agreement with the recipients of your products whereby the supply of your products will not be treated as GST-free supplies.

You request a ruling on two products with the following features:

Body Pad

The body pad provides complete pressure reduction and minimises shearing across the entire table surface.

It is a long pad that a person can lay on to reduce pressure.

It is used by the hospital surgeries to provide patients with pressure reduction. It is also used in hospital birthing showers.

Head Pad

This head pad provides head area support to allow a clear air passage way when the patient is positioned for surgery in a prone position.

Without this support and access to air, the patient would not be able to undergo delicate surgery in the prone position.

The head pad is mainly used in surgery. It can also be used post surgery by physiotherapists. In both cases the patient must lay prone for treatment.

You market the products on your website as well as having sales representatives on the road.

Reasons

GST is payable on taxable supplies. Section 9-5 of the GST Act states:

You make a taxable supply if:

a. you make the supply for ^*consideration; and

b. the supply is made in the course or furtherance of an ^*enterprise that you ^*carry on; and

c. the supply is ^*connected with Australia; and

d. you are ^*registered, or ^*required to be registered.

However, the supply is not a ^*taxable supply to the extent that it is ^*GST-free or

^*input taxed.

(* denotes a term defined in the Dictionary, starting at section 195-1 of the GST Act.)

Based on the information provided, the supply of the products satisfies the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you supply the products for consideration, in the course of your enterprise (business), the supply is connected with Australia as the goods are made available in Australia, and you are registered for GST.

The supply of the products in not input taxed under any provisions of the GST Act or any other Act. Therefore, what is left to be considered is whether the supply of each product is GST-free.

Medical aids and appliances

Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free where the medical aid or appliance:

· is covered by Schedule 3 to the GST Act, or specified in the table in Schedule 3 to the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)

· is specifically designed for people with an illness or disability, and

· is not widely used by people without an illness or disability.

Schedule 3 to the GST Act and the GST Regulations contain a list of medical aids and appliances which are generally used by people with various illnesses or disabilities. However, Schedule 3 to the GST Act and the GST Regulations do not operate in isolation to make the listed items GST-free. The supply of any item listed in Schedule 3 to the GST Act or the GST Regulations as medical aids or appliances will need to satisfy all the requirements in subsection 38-45(1) of the GST Act before it will be GST-free. That is the listed medical aids and appliances must be specifically designed for people with an illness or disability and must not be widely used by people without an illness or disability.

Additionally, subsection 38-45(3) of the GST Act provides that a supply is not GST-free if the supplier and the recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

Body Pad

Item 66 in the table in Schedule 3 to the GST Act (Item 66) lists 'pressure management mattresses and overlays'. A pressure management mattress is a mattress designed to provide comfort and prevent bed sores by evenly distributing the pressure exerted by the mattress on the patient's body. A pressure management overlay is an overlay for an ordinary mattress so that it provides the same benefits as a pressure management mattress.

You advise that the body pad provides complete pressure reduction and minimises shearing across the entire table surface. It is a long pad that a person can lay on to reduce pressure. It is used by the hospital surgeries to provide patients with pressure reduction. It is considered that this item is a mattress or overlay designed to provide comfort and prevent bed sores by evenly distributing the pressure exerted by the mattress or overlay on the patients body. As such it is considered that this product is covered by Item 66 of Schedule 3 to the GST Act.

Further, it is accepted that the body pad is specifically designed for people with an illness or disability and are not widely used by people without an illness or disability.

Therefore, the supply of the body pad is a GST-free supply under subsection 38-45(1) of the GST Act.

Head Pad

Item 77 in the table in Schedule 3 to the GST Act (Item 77) lists 'alternative positional seating abduction cushions or long leg wedges' under the category heading of Mobility of people with disabilities-physical: positioning aids.

Your particular head pad product is not considered as an alternative positional seating abduction cushion or long leg wedge, and therefore Item 77 is not satisfied.

Item 87 in the table in Schedule 3 to the GST Act (Item 87) lists 'cushions specifically designed for people with disabilities' under the category heading of Mobility of people with disabilities-physical: seating aids.

This refers to a cushion with a specifically designed character or function that has been made or adapted for the purpose of assisting with the support or positioning of an individual with a disability or to prevent or alleviate conditions associated with that disability.

Section 182-15 of the GST Act provides that the category heading in Schedule 3 to the GST Act is not an operative part of the GST Act but may be used, as per subsection 182-10(2) of the GST Act, amongst other things, 'in determining the purpose or object underlying the provision'.

The category heading in Schedule 3 to the GST Act does provide some guidance as to the purpose or object underlying the provision. The category heading specifically states 'seating aids'. The words of the category heading convey an intention that the cushions should be used by people with a disability requiring support while seated.

As such, it is considered that Item 87 covers cushions used by people requiring support while seated.

Accordingly, the head pad primarily supports the head area to allow a clear air passage way when the patient is positioned for surgery in a prone position. Therefore, it is not a cushion for the purpose of Item 87.

There are no other items listed in Schedule 3 to the GST Act, or specified in the table in Schedule 3 to the GST Regulations that cover the head pad product. As such the supply of the head pad product is not GST-free under subsection 38-45(1) of the GST Act. It will be a taxable supply under section 9-5 of the GST Act.

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