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Edited version of private ruling
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Ruling
Subject: medical aids and appliance
Question
Are the supplies of the following products GST free?
(a) alcohol skin wipes
(b) anti embolism stockings
Answer
Yes
Yes
Relevant facts:
You are registered for the goods and services tax (GST).
You supply alcohol skin wipes and anti-embolism stockings to hospitals, pharmacies and other specialist stockists.
The alcohol skin wipes are impregnated with a solution containing 70% alcohol and are individually packed in sachets.
The alcohol skin wipes are used to sanitise the skin prior to an injection.
The anti-embolism stockings (AES) are normally prescribed for medical reasons.
The design of the AES is to allow compression at the ankle, graduating with the position upwards to the knee.
The AES are used in hospitals for post surgery patients to minimise the risk of blood clotting. The AES is also used by person who may face the risk of deep vein thrombosis.
You confirm that you have not entered into any agreement with your customers to treat your supplies as not GST-free.
Reasons for decisions
Section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) outlines the circumstances in which the supplies of medical aids and appliances will be GST-free. The section states:
(1) A supply is GST-free if:
(a) it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and
(b) the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.
(2) A supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designed as a spare part for, another thing the supply of which would be GST-free under subsection (1).
(3) However, a supply is not GST-free under subsection (1) or (2) 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.
* is a defined term in the GST Act
The A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) contains regulation 38-45.01 for the purposes of paragraph 38-45(1)(a) of the GST Act. Regulation 38-45.01 of the GST Regulations refers to Schedule 3 to the GST Regulations which itemises additional medical aids and appliances for the purposes of paragraph 38-45(1)(a) of the GST Act.
Therefore, a supply of medical aids and appliances will be GST-free where:
· it is covered by items in Schedule 3 to the GST Act, or Schedule 3 to the GST Regulations
· it is specifically designed for people with an illness or disability
· it is not widely used by people without an illness or disability, and
· the supplier and the purchaser have not agreed to treat the supply as not a GST-free.
Please note: where medical aids and appliances are determined to be GST-free, their GST-free status will apply all the way down the supply chain, unless the supplier has an agreement with the recipient to treat their supply as not GST-free.
Items listed in Schedule 3 to the GST Act
Alcohol skin wipes
The alcohol skin wipes are impregnated with a solution containing 70% alcohol and therefore are covered under item 35 of Schedule 3 to the GST Act which is about alcohol skin wipes used by people who are diabetic. The alcohol skin wipes are used to sanitise the skin prior to an injection. Therefore the alcohol skin wipes satisfy paragraph 38-45(1)(a) of the GST Act.
Anti-embolism stockings
'Surgical stockings' are listed at item 3 of Schedule 3 of the GST Act. The AES are surgical stocking as they are used in hospitals for post surgery patients to minimise the risk of blood clotting. The anti-embolism stockings are graded to exert pressure at the ankle and gradually reduce in pressure from the ankle to the top of the leg.
Therefore, the AES are surgical stockings covered under item 3 of Schedule 3 to the GST Act. They provide compression at the ankle, graduating with the position upwards to the knee and are generally prescribed for medical reasons. The AES satisfies paragraph 38-45(1)(a) of the GST Act
Specifically designed for people with an illness or disability and not widely used by people without an illness or disability
Alcohol skin wipes
The alcohol skin wipes are impregnated with a solution containing 70% alcohol and is individually sealed in sachets. The alcohol skin wipes are used to sanitise the skin prior to an injection. They are specifically designed for people who suffer from an illness such as diabetes. The alcohol skin wipes are sealed in sachets for convenience and sanitation. They are supplied to hospitals, pharmacies and other specialist stockists. They are not widely used by people without an illness or disability. Therefore the alcohol skin wipes satisfy paragraph 38-45(1)(b) of the GST Act.
Anti-embolism stockings
The design of the AES allows accurate foot positioning and comfort. The AES provides compression at the ankle, graduating with the position upwards to the knee. They are also used by persons who may face a risk of deep vein thrombosis. The AES are used to minimise the risk of blood clotting. They are not used as a general item of clothing. The AES are specially designed for people who suffer from an illness or disability and are not generally used by people without an illness or disability. The AES are supplied to hospitals, pharmacies and other specialist stockists Therefore the AES satisfy paragraph 38-45(1)(b) of the GST Act.
You advise that you do not have any agreement with your customers to treat the alcohol skin wipes and AES as not GST-free. Therefore the supplies of alcohol skin wipes and the anti-embolism stockings are GST-free medical aids and appliances.
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