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Edited version of private ruling

Authorisation Number: 1011683594242

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Ruling

Subject: Goods and services tax (GST) and medical aids and appliances

Question

Is GST payable by you on your supplies of the following software programs?

Answer

No.

Relevant facts and circumstances

You sell the following software programs:

You supply the software programs wholly within Australia.

The purpose for which each software program is used/Who uses each of the software programs?:

You detailed the disabilities that each software program has been designed for.

You detailed the special features which make each software program suitable for people with disabilities.

You detailed how the special features assist people with a disability.

Whether the special features are useful for people without an illness or disability:

Whether certain sorts of people would generally use each of the software programs in any of a certain type of setting:

The software programs are purchased by certain sorts of organisations and families for certain sorts of purposes.

The manufacturer of the software family commissioned market research in a certain year, which indicated that a certain percentage of software programs from this family sold were being used to support people with disabilities.

The dominant market for the software family is individuals with disabilities/special needs who benefit from a certain feature - either to achieve a certain thing or to assist their participation in certain fields/areas. This is the group that the software is designed to support.

The features of software program 4 would not be useful for people without an illness or disability.

Reasons for decision

Summary

GST is not payable on your sales of the software programs as they are GST-free supplies of medical aids or appliances under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

(*Denotes a term defined in section 195-1 of the GST Act)

You satisfy the requirement of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you supply the software programs for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, these supplies are connected with Australia and you are registered for GST.

There are no provisions in the GST Act under which your supplies of the software programs are input taxed. Therefore, what remains to be determined is whether your supplies of the software programs are 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:

Item 8 in the table in Schedule 3 to the GST Act lists 'software programs specifically designed for people with disabilities.

We consider that the software programs in your case are specifically designed for people with disabilities because you advised that:

The purpose for which each software program is used/Who uses each of the software programs?

You detailed the disabilities that each software program has been designed for.

You detailed the special features which make each software program suitable for people with disabilities.

You detailed how the special features assist people with a disability.

We consider that the software programs would not be widely used by people without an illness or disability as you advised that:

Therefore, the software programs satisfy all of the requirements of subsection 38-45(1) of the GST Act. Hence, your supplies of these programs are GST-free supplies under that provision.

As not all of the requirements of section 9-5 of the GST Act are satisfied, your supplies of the software programs are not taxable supplies. Therefore, GST is not payable on your supplies of the software program.

However, in accordance with subsection 38-45(3) of the GST Act, a supply is not GST-free under subsection 38-45(1) of the GST Act if the supplier and the purchaser have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

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