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Ruling

Subject: Goods and services tax (GST) and sale of medical devices

Question:

Is GST payable on your sales of various grab rail and back rest products?

Answer:

No.

Relevant facts and circumstances

You are registered for GST.

You will sell various medical products.

The products are specifically designed and manufactured to be used solely to support a person with a disability or illness. These products meet AS 1428.1-2009. The objective of this standard is to provide building designers and users with the minimum design requirements for new building work to enable access for people with disabilities.

The medical products are designed for people with a disability or illness. It meets AS 1428.1-2009. It would only be used by people with an illness or disability.

You will supply the products in question wholly within Australia.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1)

Reasons for decision

Summary

GST is not payable on your sales of the products in question 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:

· you make the supply for *consideration; and

· the supply is made in the course or furtherance of an *enterprise that

· you *carry on; and

· the supply is *connected with Australia; and

· 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 term defined in section 195-1 of the GST Act)

You will satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act because:

· you will supply the products for consideration

· you will make these supplies in the course or furtherance of an enterprise that you carry on

· these supplies will be connected with Australia, and

· you are registered for GST.

There are no provisions in the GST Act under which your sales of the products will be input taxed.

Therefore, what remains to be determined is whether your sales of the products will be GST-free.

A sale of a medical device may be GST-free under subsection 38-45(1) of the GST Act, which states:

A supply is GST-free if:

· it is covered by Schedule 3 (medical aids and appliances), or specified

· in the regulations; and

· 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.

The relevant item in Schedule 3 to the GST Act (under the category heading personal hygiene for people with disabilities) is support items (item 121)

A support is an aid or appliance that has design characteristics such that it assists a disabled person. In addition, generally it must be able to support the weight of the disabled person.

A grab rail may possess the characteristics of a support and be identifiable as a support either at the point of manufacture or, in the case of a generic grab rail, at the point of installation in an appropriate area. A grab rail is covered by Item 121 if it has the characteristics of and is identifiable as being a support when it is supplied.

The grab rail products in question are specifically designed and manufactured to be used solely to support a person with a disability or illness and meet AS 1428.1-2009. Therefore, they have the characteristics of and are identifiable as being support aides when you supply them. Hence, they are covered by item 121.

We consider that the product is a support aide because:

· it is an accessible back rest

· it is designed for people with a disability or illness

· it meets AS 1428.1-2009

· it would assist a disabled person

· it would support a disabled person, and

· it would only be used by people with an illness or disability.

· Hence, the back rest product is covered by item 121.

Therefore, your sales of the products in question will satisfy the requirement of paragraph 38-45(1)(a) of the GST Act.

These products are specifically designed for people with an illness or disability and would not be widely used by people without an illness or disability. Therefore, the requirements of paragraph 38-45(1)(b) of the GST Act will be satisfied in regards to these products.

Hence, your sales of the products in question will be GST-free under subsection 38-45(1) of the GST Act as all of the requirements of that provision are met.

Therefore, your sales of the products in question will not be taxable supplies. Hence, GST will not be payable on your sales of these products.

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