Edited version of private ruling

Authorisation Number: 1011658113713

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Ruling

Subject: GST and stoma care and wound care products

Question 1

1. Is the supply of the Protective Paste a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

1. Yes, the supply of the Protective Paste is a GST-free supply under subsection 38-45(1) of the GST Act.

Question 2

2. Is the supply of the Protective Barrier Wipes and the Adhesive Remover Wipes GST-free supplies under subsection 38-45(1) of the GST Act?

Answer 2

2. Yes, the supply of the Protective Barrier Wipes and the Adhesive Remover Wipes are GST-free under subsection 38-45(1) of the GST Act.

Question 3

3. Is the supply of the following wound care products GST-free under subsection 38-45(1) of the GST Act?

Dressing A

Dressing B

Dressing C

Dressing D

Dressing E

Paste

Hydroactive gel

Hydrating Dermal Wound Dressing with alginate.

Answer 3

3. Yes, the supply of the above listed advanced wound care products is GST-free under subsection 38-45(1) of the GST Act.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The entity is registered for goods and services tax (GST). It sells a number of products that are marketed for stoma and wound care.

Protective Paste

This product can be used on raw, weeping and broken skin around the stoma. It helps to manage sore skin and to prevent further damage. The tube provides detail stating 'hydro colloid' based paste is applied to area surrounding the stoma if it becomes irritated to prevent further erosion and allow the skin to heal.

You sell this product in a xx gram and x gram tube. The x gram tube is generally sold to hospitals for single use. The xx gram tube is generally supplied through Stoma Associations. The xx gram tube is listed on the Stoma Appliance Schedule.

Protective Wipes & Adhesive Remover Wipes

The protective wipes provide a barrier film layer on skin to be used under tapes, skin barriers, adhesive and hydro colloid dressings to help protect against irritation, excoriation and adhesive build-up.

The Adhesive Remover Wipes gently remove all adhesives including skin barriers, tapes and hydro colloid dressings.

Both the Protective Wipes and the Adhesive Remover Wipes are listed on the Stoma Appliance Schedule. Both these products have a general usage in wound care and a specific usage in stoma care. In 2008, xx% of sales of the Protective Wipes you made were to Stoma Associations. In 2008, xx% of sales of the Adhesive Remover Wipes you made were to Stoma Associations. The remainder of the sales were predominantly made to hospitals or on-sold directly to stoma patients.

Wound Care Products

Dressing A

The dressing is a sterile, occlusive dressing with a hydro colloid adhesive and central absorbent pad indicated for the management of low to moderately exuding chronic and acute wounds. It combines a non-adherent wound contact layer surrounded by an adhesive hydro colloid border and an integral pad containing granules which absorb exudates and forms a gel to lock fluid away. The dressing contains at least 44.7% hydro colloid in its composition. The dressing also has an outer polyurethane layer.

Dressing B

The dressing is a sterile non-adhesive wound dressing. It combines a non-adherent wound contact layer with an integral pad containing granules which absorb exudate. It is indicated for the management of lightly to moderately exuding wounds. The dressing contains hydro colloid, adhesive and a polyurethane film.

Dressing C

The dressing is an adhesive, tapered edge; modern hydro colloid wound dressing with a change indicator. The adhesive hydro colloid matrix and the outer polyurethane film on signal dressings are permeable by moisture vapour and provide an occlusive barrier against bacteria, viruses, dirt and water. This dressing is indicated for use on dermal ulcers including full-thickness wounds, pressure ulcers, leg ulcers, superficial wounds, partial thickness burns and donor sites. The dressing contains at least 44.7% hydro colloid in its composition. The dressing also has an outer polyurethane layer.

Dressing D

The dressing is a hydro colloid dressing indicated for the management of lightly exuding wounds. The dressing contains at least 44.7% hydro colloid in its composition. The dressing also contains a waterproof outer polyurethane film.

Dressing E

The dressing is a hydro colloid, moisture-retentive wound dressing used for partial and full-thickness wounds with exudates. This dressing is indicated for chronic wounds, for example pressure ulcers and leg ulcers, acute wounds for example traumatic wounds, partial thickness burns and donor sites. The dressing contains at least 44.7% hydro colloid in its composition. The dressing also has an outer coating which is a laminate of polyurethane film/foam.

Paste

The paste is a hydro colloid paste which can be used to manage chronic wounds for example pressure ulcers and leg ulcers, acute wounds for example traumatic wounds, partial thickness burns and donor sites. It incorporates a unique hydro colloid formulation that distinguishes it from other hydro colloid dressings.

Hydroactive Gel

The hydro active gel is a clear, preservative-free, viscous hydro gel. It is indicated for the management of partial and full-thickness wounds, ideally as a filler for dry cavity wounds to provide a moist healing environment. The gel contains 100% hydro gel in its composition.

Hydrating Dermal Wound Dressing Gel with Alginate

The gel is a hydrating dermal wound dressing gel with alginate.

The gel contains 100% alginate in its composition.

The entity markets the hydro colloid and hydro gel products in Australia in the area of advanced wound care and such use constitutes all Australian use of the products.

Reasons for decision

Question 1

Under subsection 38-45(1) of the GST Act a supply of a medical aid and appliance is GST-free if:

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

§ the thing supplied is specifically designed for people with an illness or disability, and

§ the thing supplied is not widely used by people without an illness or disability.

Protective Paste

Item 142 of Schedule 3 (Item 142) lists 'stoma products including all bags and related equipment for patients with colostomies and ileostomies'. Item 20 of Schedule 3 to the GST Regulations (Item 20) lists 'stoma products including all bags and related equipment for patients with urostomies'.

The Stoma Appliance Schedule under the Stoma Appliance Scheme is administered by the Commonwealth Department of Health and Ageing and any product listed on the Stoma Appliance Schedule is a stoma product covered under Item 142 and Item 20. Stoma products not listed in the Stoma Appliance Schedule will also be covered by Item 142 and Item 20 where they are specifically designed for use with or in connection with a stoma.

The Protective Paste is sold by you in a xx gram and a x gram tube. The xx gram tube is listed on the Stoma Appliance Schedule. As such, it is considered that the Protective Paste (regardless of whether it is sold in the xx gram or x gram tube) is covered by Item 142 or Item 20.

The Protective Paste is designed to be used for stoma care. The product is sold to hospitals and through Stoma Associations. As such, it is considered that the Protective Paste is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability. Therefore, the supply of the Protective Paste is GST-free under subsection 38-45(1) of the GST Act.

Question 2

Protective Wipes & Adhesive Remover Wipes

The Protective Wipes and the Adhesive Remover Wipes are listed on the Stoma Appliance Schedule. As such, it is considered that the Protective Wipes and the Adhesive Remover Wipes are covered by Item 142 or Item 20.

The Protective wipes are designed to provide a barrier film layer on skin under tapes, skin barriers, adhesives and hydro colloid dressings to help protect against irritation, excoriation and adhesive build-up. The Adhesive Remover Wipes gently remove all adhesives including skin barriers, tapes and hydro colloid dressings. These products are used for general wound care and stoma care. The predominant sales of these products are made to Stoma Associations. As such, it is considered that these products are specifically designed for people with an illness or disability and not widely used by people without an illness or disability. Therefore, the supply of the Protective Wipes and the Adhesive Remover Wipes are GST-free under subsection 38-45(1) of the GST Act.

Question 3

Wound care products

Item 1 of Schedule 3 to the GST Regulations (Item 1) lists 'alginate'. Item 2 of Schedule 3 to the GST Regulations (Item 2) lists 'hydro colloids'. Item 3 of Schedule 3 to the GST Regulations (Item 3) lists 'hydro gel'. Item 4 of Schedule 3 to the GST Regulations (Item 4) lists 'polyurethane film'. Item 5 of Schedule 3 to the GST Regulations (Item 5) lists 'polyurethane foam'.

It is considered that Items 1, 2, 3, 4 and 5 are to cover advanced wound care products predominantly consisting of alginate, hydro colloids, hydro gel, polyurethane film, or polyurethane foam respectively.

All the products in question which you manufacture contain hydro colloids, hydro gel, alginate and a polyurethane film/foam layer. The question is whether the intention is, for an advanced wound care product which contains one or more of the items listed in the regulations in addition to other items which are not listed, to be GST-free.

The second column of the Regulations is not operative. This category heading includes 'Advanced wound care.' This column is considered to be an explanatory section. In interpreting an operative provision, an explanatory section may only be considered in determining the provision's meaning if the provision is ambiguous or obscure. It is considered that column 3 which is the operative provision is ambiguous. By turning our minds to column 2 it can be suggested that the intention of the items in the third column is, components which are used to make up 'advanced wound care.'

It is considered that an 'advanced wound care' item will be GST-free when it is predominantly made up of the components listed in items 1-5 of Schedule 3 to Regulation 38-45.01.

As the products in question are predominantly made up of the components listed in items 1-5 of Schedule 3 to the GST Regulations, it is considered that these products are advanced wound care products that fall within these item numbers.

As the products are covered by schedule 3 to the GST Regulations and the products supplied are specifically designed for people with an illness or disability, and the products are not widely used by people without an illness or disability they are GST-free under subsection 38-45(1) of the GST Act.

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