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Edited version of your private ruling
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Ruling
Subject: GST and a medical aid or appliance
Question:
Is your supply of a range of ear plugs, GST-free?
Answer:
No, your supply of a range of ear plugs is not GST-free.
Relevant facts and circumstances
You are registered for GST.
You supply a range of ear plugs to retailers.
The ear plugs are to protect the ear from bacteria, loud noise, etc.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Division 38
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)
Reasons for decision
Summary
The range of ear plugs that you supply does not satisfy the requirements to be a medical aid or appliance. As such, your supply of the ear plugs is not GST-free. Rather, the range of ear plugs you supply are a taxable supply and thus, subject to GST.
Detailed reasoning
A supply is GST-free if it is GST-free under Division 38 of the A New Tax System (Goods and Services Tax) Act (GST Act).
Of relevance to this case is subsection 38-45(1) of the GST Act which provides that the supply of certain medical aids and appliances is GST-free where the medical aid or appliance is:
· covered by Schedule 3 to the GST Act or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)
· is specifically designed for people with an illness or disability, and
· is not widely used by people without an illness or disability.
In this case, you supply a range of ear plugs. Ear plugs are not specifically listed in Schedule 3 to the GST Act but item 43 in the table in Schedule 3 to the GST Act (Item 43) lists 'hearing aids' as a medical aid or appliance.
The term 'hearing aid' is not defined in the GST Act. However, it is our view that 'hearing aids' are an electronic amplifying device consisting of a microphone, amplifier and receiver which is designed to bring sound into the ear. Generally these devices are battery operated.
Based on the information provided, the range of ear plugs that you supply are designed to provide protection against bacteria, loud noise, etc that can all damage the hearing rather than to aid hearing.
Therefore, your range of ear plugs are not 'hearing aids' and as such, are not covered by Item 43.
In addition, your range of ear plugs are not covered by any other item in Schedule 3 to the GST Act nor are they listed in the GST regulations. Therefore, the ear plugs you supply are not GST-free as a medical aid or appliance as the requirements of subsection 38-45(1) of the GST Act are not satisfied.
Furthermore, there are no other provisions in the GST Act that will make your supply of ear plugs GST-free.
Consequently, your supply of a range of ear plugs is not GST-free. Instead, the range of ear plugs you supply will be a taxable supply and thus, subject to GST where all of the requirements of section 9-5 of the GST Act are satisfied.
Section 9-5 of the GST Act provides that you make a taxable supply if:
· you make the supply for consideration
· the supply is made in the course or furtherance of an enterprise that you carry on
· the supply is connected with Australia, and
· you are registered, or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
In this case, you supply your range of ear plugs for consideration and in the course of your enterprise. As well, the supply is connected with Australia and you are registered for GST.
As stated previously, your supply of a range of ear plugs is not GST-free. In addition, your supply of a range of ear plugs is not input taxed under any of the provisions in the GST Act.
Accordingly, your supply of a range of ear plugs is a taxable supply as it meets all the requirements of section 9-5 of the GST Act. Therefore, you are liable for GST on your supply of a range of ear plugs.
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