Edited version of private ruling

Authorisation Number: 1011619842871

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Ruling

Subject: GST and medical aids and appliances

Question

Is your supply of the anti-snoring product GST-free?

Answer

No, your supply of the anti-snoring product is not GST-free. It is a taxable supply.

Relevant facts and circumstances

You are registered for GST.

You are a distributor of the anti-snoring product.

You have provided a copy of the product's instructions and the product's description on the packaging.

The product is a plastic device. It is an anti-snore nasal dilator that improves nasal air-flow and promotes freer breathing and helps to reduce snoring. The product is not recommended for the medical condition sleep apnoea.

The product has been clinically tested and proven to be effective.

The product has been developed to meet a specific need of persons with habitual snoring.

Reasons for decision

Subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply of a medical aid or appliance is GST-free where:

it is covered by an item listed in the table in 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), and

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

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

A medical aid or appliance must meet all three elements of subsection 38-45(1) of the GST Act to be GST-free.

The anti-snoring product is not specifically listed in Schedule 3 to the GST Act; nor is it specifically listed in Schedule 3 to the GST Regulations.

You advised however, that your anti-snoring product performs a similar function to devices which are covered by items 123 to 138 in the table in Schedule 3 to the GST Act. We will now examine if your product is covered by each of the items you mentioned.

Item 123

Item 123 in the table in Schedule 3 to the GST Act (Item 123) lists 'ventilators'.

The term 'ventilators' is not defined in the GST Act. Where a term is not defined in the relevant Act, it takes on its ordinary meaning, unless the term has a special or technical meaning. Where a term has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that term relates (Herbert Adams Pty Ltd v. Federal Commissioner of Taxation (1932) 47 CLR 222; (1932) 2 ATD 31).

Therefore, it is appropriate to refer to the ordinary meaning of that term. The Macquarie Dictionary (1997) defines ventilator as:

any contrivance for replacing foul or stagnant air by fresh air.

Contrivance is defined as:

a device, especially a mechanical one.

Schedule 3 to the GST Act contains three columns made up of the item number, the category and the medical aid or appliance. The second column of Schedule 3 is not operative, but may be considered if the meaning of the medical aid or appliance listed in the third column is unclear. The category heading for the purposes of item 123 confirms that 'ventilators' are those that are 'respiratory appliances'.

Therefore, it will be considered that a 'ventilator' is a respiratory appliance designed to mechanically move breatheable air into and out of the lungs, to provide the mechanism of breathing for people who are physically unable to breathe, or breathing insufficiently.

In your case, although the anti snoring product assists with breathing difficulties, it is not a ventilator as it is not a respiratory appliance designed to mechanically move breatheable air into and out of the lungs, to provide the mechanism of breathing for people with breathing difficulties. Therefore, your product is not ventilator and is not covered by item 123.

Item 124

Item 124 in the table in Schedule 3 to the GST Act (Item 124) lists 'continuous positive airway pressure (CPAP) appliances'.

The term 'continuous positive airway pressure (CPAP) appliances' is not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'continuous positive airway pressure' as:

a technique of respiratory therapy, in either spontaneously breathing or mechanically ventilated patients, in which airway pressure is maintained above atmospheric pressure throughout the respiratory cycle by pressurization of the ventilatory circuit.

'CPAP appliance' is a technical term for appliances that assist people with obstructive sleep apnoea and the snoring associated with it. It does this by introducing continuous positive air pressure into the person's throat, which prevents the throat from collapsing. The appliances usually have a face mask that is attached to a tube and a machine that blows pressurized air into the mask and through the airway to keep it open.

The purpose of your device is to assist with breathing difficulties to treat snoring by improving nasal air-flow and promoting freer breathing however it is not a CPAP appliance as it does not deliver a stream of compressed air into a person's throat. Your product is also not recommended to treat sleep apnoea. A CPAP appliance comprises a number of separate parts, including a machine, tubes and a mask. Your device is a single item, and it does not contain a mask or require a mask to be utilised. Hence, your device is not a CPAP appliance and is not covered by item 124.

Item 125, item 126 and item 127

Item 125, 126 and 127 in the table in Schedule 3 to the GST Act (Item 125, item 126 and item 127) lists 'respiratory appliance mask assemblies - complete', 'respiratory appliance mask assemblies - components' and 'respiratory appliance accessories'.

These terms are not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'respirator' as:

1. An apparatus for administering artificial respiration in cases of respiratory failure.

2. An appliance fitting over the mouth and nose, used for the purpose of excluding dust, smoke, or other irritants, or of otherwise altering the air before it enters the respiratory passages.

The Australian Oxford Dictionary (1999) defines a mask as 'a respirator used to filter inhaled air or to supply gas for inhalation'.

The Australian Concise Oxford Dictionary (1997) defines the word 'accessory' to include 'an additional or extra thing' or 'a small attachment or fitting'.

The Macquarie Dictionary (1997) defines 'accessory' as 'a subordinate part or object; something added or attached for convenience, attractiveness, etc., such as a spotlight, heater, driving mirror, etc., for a vehicle.'

Your device is a single stand alone item, and it does not contain a mask or require a mask to be utilised. In addition it does not form an additional or extra part of a respiratory appliance and is neither an attachment nor fitting therefore based on the description of your product, it is considered that it is not covered by items 125, 126 and 127.

Item 128

Item 128 in the table in Schedule 3 to the GST Act (Item 128) lists 'sleep apnoea machines'.

The term 'sleep apnoea machines' is not defined in the GST Act.

The Macquarie Dictionary (1997) definition of 'machine' includes:

1. an apparatus consisting of interrelated parts with separate functions, which is used in the performance of some kind of work: a sewing machine.

2. a mechanical apparatus or contrivance; a mechanism.

3. something operated by a mechanical apparatus, as a motor vehicle, a bicycle, or an aeroplane.

A sleep apnoea machine is a technical term for an appliance or machine whose primary function is to assist people with sleep apnoea to breathe during sleep. Your product is an anti snoring product that is not recommended for the medical condition of sleep apnoea. In addition your product is not made up of a number of interrelated parts and hence does not fall within the ordinary meaning of a machine. Consequently, your product is not covered by item 128.

Item 129

Item 129 in the table in Schedule 3 to the GST Act (Item 129) lists 'peak flow meters'.

The term 'peak flow meters' is not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'peak flow meter' as:

A hand-held device that measures peak expiratory flow; useful for self-monitoring of airway obstruction in asthma.

A peak flow meter is a small, hand-held device used to monitor a person's ability to breathe out air. Your product is not a hand-held device that measures a person's ability to breathe out air and consequently is not covered by item 129.

Item 130

Item 130 in the table in Schedule 3 to the GST Act (Item 130) lists 'nebulisers'.

The term 'nebulisers' is not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'nebulisers' as:

A device used to reduce a liquid medication to extremely fine cloudlike particles; useful in delivering medication to deeper parts of the respiratory tract.

A nebuliser is a device used to administer medication in the form of a mist inhaled into the lungs. Your product is not a nebuliser and consequently is not covered by item 130.

Item 131

Item 131 in the table in Schedule 3 to the GST Act (Item 131) lists 'spacers'.

The term 'spacers' is not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'spacer' as:

A device attached to a metered-dose inhaler that aids delivery of inhaled medications.

Spacers are used to ensure proper delivery of inhaled medication. Your product is not used for this purpose. Consequently, your product is not a spacer and is not covered by item 131.

Item 132

Item 132 in the table in Schedule 3 to the GST Act (Item 132) lists 'vaporisers'.

The term 'vaporisers' is not defined in the GST Act.

Stedman's Medical Dictionary 28th edition defines 'vaporizer' as:

1. An apparatus for reducing medicated liquids to a state of vapor suitable for inhalation or application to accessible mucous membranes.

2. A device for volatizing liquid anesthetics.

The primary purpose of a vaporiser is to facilitate the delivery of liquid medications. Your product is not used for this purpose. Consequently, your product is not a vaporiser and is not covered by item 132.

Item 133

Item 133 in the table in Schedule 3 to the GST Act (Item 133) lists 'respirators'.

The term 'respirators' is not defined in the GST Act.

The Australian Oxford Dictionary (1999) defines respirator to mean:

an apparatus worn over the face to prevent poison gas, cold air, dust particles, etc, from being inhaled.

Med. An apparatus for maintaining artificial respiration.

The term artificial respiration is further defined to mean the restoration or initiation of breathing by manual or mechanical or mouth-to-mouth methods.

Your product does not fulfil this function and is not used to provide artificial respiration. Accordingly, your product is not covered by Item 133.

Item 134

Item 134 in the table in Schedule 3 to the GST Act (Item 134) lists 'air pumps'.

The term 'air pumps' is not defined in the GST Act.

'Air pump' is not defined in the Stedman's Medical Dictionary 28th edition. However, the Stedman's Medical Dictionary 28th edition defines 'pump' as:

1. An apparatus for forcing a gas or liquid from or to any part.

2. Any mechanism for using metabolic energy to accomplish active transport of a substance.

The second column of Schedule 3 is not operative, but may be considered if the meaning of the medical aid or appliance listed in the third column is unclear. The category heading for the purposes of item 134 confirms that 'air pumps' are those that are 'respiratory appliances-other products for those with breathing difficulties.'

Therefore, it will be considered that an 'air pump' is a respiratory appliance for forcing air from or to any part of the body for people with breathing difficulties.

Your product is not an 'air pump' as it is not a respiratory appliance for forcing air from or to any part of the body for people with breathing difficulties. Accordingly, your product is not covered by Item 134.

Item 135

Item 135 in the table in Schedule 3 to the GST Act (Item 135) lists 'bottled oxygen and associated hardware'.

Your product is not 'bottled oxygen'. The 'associated hardware' is considered to be mechanical equipment that usually accompanies or is associated with another piece of equipment, in order to conduct a certain activity in particular the delivery of medical oxygen to a patient. Accordingly, your product is not covered by Item 135.

Item 136

Item 136 in the table in Schedule 3 to the GST Act (Item 136) lists 'oxygen concentrators'.

An oxygen concentrator's primary function is to deliver oxygen to a patient at substantially higher concentrations than available in ambient air. Your product is not an oxygen concentrator as it does not deliver oxygen to a patient. Accordingly, your product is not covered by Item 136.

Item 137

Item 137 in the table in Schedule 3 to the GST Act (Item 137) lists 'breathing monitors'.

The term 'breathing monitor' is not defined in the GST Act. It is also not defined in the Stedman's Medical Dictionary 28th edition. In the absence of a definition, an item generally takes the technical meaning given to it in by the industry in which the item is used. It is generally accepted in the medical industry that a 'breathing monitor' is a device that monitors a person's breathing while he/she is under anaesthesia/unconsciousness.

Your product does not perform this function and is not covered by Item 137.

Item 138

Item 138 in the table in Schedule 3 to the GST Act (Item 138) lists 'ventilators'. The category heading for the purposes of item 138 confirms that 'ventilators' are those that are 'respiratory appliances-other products for those with breathing difficulties.'

However, your product is not a ventilator as it is not designed to mechanically move breatheable air into and out of the lungs, to provide the mechanism of breathing for people with breathing difficulties. Therefore, your product is not covered by item 138.

Summary

The supply of your product is not covered under any of the items you have mentioned and are not covered by any other item listed in the table in Schedule 3 to the GST Act or specified in the table in Schedule 3 to the GST Regulations. Therefore, you are not making a GST-free supply under subsection 38-45(1) of the GST Act when you sell your anti-snoring product.

Section 38-47 of the GST Act provides that a supply is GST-free if it is a supply of goods of a kind that the Health Minister, by determination in writing, declares to be goods the supply of which is GST-free. The Health Minister has made such a determination. However, the supply of your product is not within the scope of this determination. Accordingly, you are not making a GST-free supply under section 38-47 of the GST Act.

There are no other provisions in the GST Act that would make your supply of the anti-snoring product GST-free. Therefore, your supply of this product will not be GST-free.

Section 9-5 of the GST Act provides that you make a taxable supply if:

(a) you make the supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(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.

In your case, you will satisfy the requirements of paragraphs 9-5(a) to (d) of the GST Act when you sell your product. That is, you will make a supply when you sell your product for consideration. The supply will be made in the course or furtherance of an enterprise that you carry on. The supply is connected with Australia, and you are registered for GST. Additionally, there are no provisions in the GST Act that make your supply input taxed, and as explained above, you are not making a GST-free supply.

Therefore, as all the requirements of section 9-5 of the GST Act are met, you are making a taxable supply when you sell the anti-snoring product.

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