1011820167669 | Legal database

Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private ruling

Authorisation Number: 1011820167669

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST status of the supply of medical aids and appliances

Question

Is the supply of Product X GST-free?

Answer: No, the supply of Product X is not GST-free. The supply is taxable.

Relevant facts and circumstances

You are the supplier of Product X in Australia.

The Product X user guide states that Product X monitors the breathing movements of a sleeping baby and it is designed to set off a sound and visual alarm where the breathing movements become irregular.

You provided a copy of the Certificate of Inclusion of a Medical Device issued by the Therapeutic Goods Administration (TGA). The Product X is registered as ARTG number XXX and is listed as a class 11b device.

GST is payable if an entity is making a taxable supply.

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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

(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 defined term in the GST Act.)

In your case, the supply of the Product X satisfies the requirements of paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act. That is, you are selling the Product X for consideration, the sale is made in the course or furtherance of your enterprise, the supply is connected with Australia and you are registered for GST. The supply of the Product X, in the circumstances described, is not input taxed. It remains to be determined if the supply is GST-free.

Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance:

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

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

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

Sleep apnoea machines are listed at Item 128 and breathing monitors are listed at Item 137. Under section 182-15 of the GST Act and paragraph 182-10(2)(b) of the GST Act, the category heading of 'Respiratory appliances - other products for those with breathing difficulties' may be used to confirm that the meaning in Item 128 and Item 137 is the ordinary meaning. As such, sleep apnoea machines and breathing monitors are respiratory appliances.

The terms 'sleep apnoea machines' and 'breathing monitors' are not defined in the GST Act.

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).

Item 128 - Sleep apnoea machines

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.

The Product X monitors the breathing movements of a sleeping baby and does not assist in the baby's breathing.

Consequently, Product X is not a 'sleep apnoea' machine and is not covered by Item 128.

Item 137 - Breathing monitors

The health industry considers a 'breathing monitor' to be a device with the primary purpose of measuring a patient's breathing in circumstances where such monitoring is essential (for example, the patient is unconscious or under an anaesthetic).

Although Product X monitors and counts the rate of a baby's breathing, its primary purpose is to monitor the breathing movement of basically healthy babies and produce an alarm when irregularities occur. Furthermore, Product X is not used to monitor the baby's breathing in situations where the baby is unconscious or under an anaesthetic.

As such, it is considered that Product X is not a 'breathing monitor' and is not covered by Item 137.

Conclusion

Product X is not covered by any other items in Schedule 3 or the Regulations. Hence, the supply of Product X is not GST-free under subsection 38-45(1) of the GST Act.

Further, the supply of Product X is not GST-free under any other provisions of the GST Act or any other Act.

Therefore, as all the requirements of section 9-5 of the GST Act are satisfied, the supply of Product X is a taxable supply. Hence, GST is payable on the supply.

You should note that the GST Act does not make the supply of a medical aid or appliance GST-free merely because it is registered with TGA.

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).