Edited version of your private ruling

Authorisation Number: 1012512419984

Ruling

Subject: GST and medical aids and appliances

Question 1

Is the supply of a remote individual monitoring system (the System) GST-free under section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No

Question 2

Is the supply of the System GST-free under subsection 38-30(3) of the GST Act?

Answer

No

Question 3

Is the supply of the System GST-free under section 38-38 of the GST Act?

Answer

No

Relevant facts and circumstances

You are registered for GST.

You are the supplier of a remote individual monitoring system (the System).

The System includes the remote monitoring equipment together with activity reports and alerts in relation to the individual being monitored through the internet.

The System is designed to transmit data from sensors in the home of the person being monitored via a mobile phone network to a server.

Care professionals, home care staff and family members log on through the internet to view a chart of daily activity, and set up alerts circumstances on which they need to act. For example, an alert can be set up for a situation where there has been no movement from a room within, say, a 3 hour period.

The System is primarily designed for frail elderly people who are becoming forgetful, have mild cognitive impairment, or early stage dementia.

You will not be applying for funding as a health care provider.

You will provide the System but will not be providing any care services.

Contentions

The System is GST-free pursuant to section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The System falls within the description of Item 33 of Schedule 3 (medical aids and appliances), being a medical alert device.

Alternatively, the System is GST-free pursuant to subsection 38-30(3) of the GST Act. The System falls within the definition of 'community care' as defined in the Aged Care Act 1997 and is of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles.

Alternatively, the System is GST-free pursuant to section 38-38 of the GST Act. The System is of a kind described in items 5 and 8 of Schedule 1 to the GST-free Supply (National Disability Insurance Scheme Supports) Determination 2013.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Division 38

Question 1

Subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply is GST-free if:

· it is covered by Schedule 3 to the GST Act or specified in the GST 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.

Schedule 3 to the GST Act, and Schedule 3 to the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), list a range of items which may be GST-free medical aids or appliances.

You have contended that the System falls within the scope of Item 33 of Schedule 3 to the GST Act. The medical aid or appliance identified at Item 33 of Schedule 3 to the GST Act is a "medical alert" device.

The term '"medical alert" devices' is not defined in the GST Act.

Where a term is not defined in the relevant Act, it takes on its ordinary meaning, unless the term has a special or technical meaning. 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).

The term '"medical alert" devices' is not defined in medical dictionaries. For the purposes of item 33 of Schedule 3, Issue 4.a.8 of the Australian Taxation Office's Health Industry Partnership - Issues Register provides that a 'medical alert device' is interpreted to mean a device which is designed for the purpose of alerting medical personnel, or an ambulance service, that a person is in need of emergency medical assistance or that the person has a medical condition that may require specific treatment.

When considering whether an item is covered by Schedule 3 to the GST Act or Schedule 3 to the GST Regulations, it is necessary to have regard to the essential character of the thing. This means deciding what the goods essentially are, as distinct from merely identifying one of a number of characteristics the goods might have. This approach relies upon deciding the basic nature of the goods and involves consideration of what the goods are made of and what they might be used for.

The primary purpose of a 'medical alert' device is to alert. Although the System has an alarm function, the primary function of the System is to monitor the movements of an individual via sensors placed within the individual's residence and transmit data from the sensors to a server via a mobile phone network. Care professionals, home care staff and family members log on to the server and view a chart of daily activity, and set up alerts circumstances on which they need to act.

Whilst the System does contain an alarm function, the System is not a medical alert device in itself as it is not designed for the purpose of alerting medical personnel, or an ambulance service, that a person is in need of emergency medical assistance. The capability within the System to set up alert circumstances is merely a function within the System. As such, the System is not a "medical alert" device and is not covered by Item 33 in Schedule 3 to the GST Act.

Furthermore, the System is not covered by any of the other items in Schedule 3 of the GST Act or Schedule 3 of the GST Regulations and is therefore not GST-free under subsection 38-45(1) of the GST Act.

Question 2

Subsection 38-30(3) of the GST Act provides that a supply of 'home care' is GST-free if the supply is of services:

· that are provided to one or more aged or disabled people; and

· that are of a kind covered by item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles.

Please note that effective from 1 August 2013, reference to the term 'community care' is now a reference to 'home care' pursuant to a recent amendment under the Aged Care (Living Longer Living Better) Act 2013.

The term 'home care' is defined in section 195-1 of the GST Act as the meaning given to it by section 45-3 of the Aged Care Act 1997 (Aged Care Act). 'Home care' is defined in the Aged Care Act as being care consisting of a package of personal care services and other personal assistance provided to a person who is not being provided with residential care.

Item 2.1 (daily living activities assistance) of Part 2 of Schedule 1 to the Quality of Care Principles (Item 2.1) provides that the care or service provided relates to daily living activities assistance consisting of personal assistance, including individual attention, individual supervision, and physical assistance, with:

(a) bathing, showering, personal hygiene and grooming

(b) maintaining continence or managing incontinence, and using aids and appliances designed to assist continence management

(c) eating and eating aids, and using eating utensils and eating aids (including actual feeding if necessary)

(d) dressing, undressing, and using dressing aids

(e) moving, walking, wheelchair use, and using devices and appliances designed to aid mobility, including the fitting of artificial limbs and other personal mobility aids

(f) communication, including to address difficulties arising from impaired hearing, sight or speech, or lack of common language (including fitting sensory communication aids), and checking hearing aid batteries and cleaning spectacles

Excludes hairdressing

It is your contention that the supply of the System falls within the scope of Item 2.1 as the System provides "personal assistance, including individual attention, individual supervision and physical assistance with moving, walking and communication".

We consider that Item 2.1 is intended to apply to care or assistance provided to individual on a personal basis. That is a care provider would personally assist with the daily living activities of the recipient of the care. This is evidenced by the description and exhaustive list of activities intended to be covered by Item 2.1. Specifically in regard to "assistance with moving, walking, …", the description of the care contemplates the care provider fitting artificial limbs and other mobility aids to the recipient of the care service. Similarly in regard to assistance with "communication", the description of the care contemplates the care provider fitting sensory communication aids, checking hearing aid batteries and cleaning the spectacles of the care recipient.

Consequently we consider that your supply of the System does not provide 'personal assistance' and does not fall within the scope of Item 2.1.

Furthermore, the scope of section 38-30 of the GST Act is limited to supplies of 'home care' (subsections 38-30(1) and (3) of the GST Act) and 'care' (subsections 38-30(2) and (4) of the GST Act). You have advised that you will be providing the System however you will not be providing any care services. In addition, the provision of goods when considering the GST classification of a supply pursuant to subsection 38-30(3) of the GST Act will not be GST-free. Paragraph 5.24 of the Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 provides the following:

5.24 Privately funded community care services are GST-free if they are of a type specified in item 2.1, Part 2 of Schedule 1 to the Quality of Care Principles made under the Aged Care Act 1997. Such services include assistance with bathing, eating, personal hygiene and respite care. Subsection 38-30(3). The provision of goods, including food, associated with these services will not be GST-free unless specified elsewhere. For example, certain medical aids and appliances are GST-free. See 5.27

Given the above explanation, your supply of the System will not be GST-free under subsection 38-30(3) of the GST Act.

Question 3

Section 38-38 of the GST Act states:

A supply is GST-free if the supply:

(a) is a supply to a participant (within the meaning of the National Disability Insurance Scheme Act 2013) for whom a participant's plan is in effect under section 37 of that Act; and

(b) is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant's plan; and

(c) is made under a written agreement, between the supplier and the participant or another person, that:

(i) identifies the participant; and

(ii) states that the supply is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant's plan; and

(d) is of a kind that the *Disability Services Minister has determined in writing.

Paragraph 38-38(d) of the GST Act requires that the supply is of a kind that the Disability Services Minister has determined in writing. The Minister has issued GST-free Supply (National Disability Insurance Scheme Supports) Determination 2013 (Minister's Determination) which contains a list of items that may be GST-free. You have contended that your supply of the System falls within the scope of Item 5 (Assistance with daily personal activities) and/or Item 8 (Assistive equipment for general tasks and demands) of Schedule 1 to the Minister's Determination.

The Explanatory Statement to the Minister's Determination (ES) provides further guidance as to the scope of such supplies. The ES provides that the kinds of supplies listed in the Minister's Determination are intended to reflect the kinds of supplies of disability supports that are GST-free where the supplier receives government funding for the supplies.

In regard to the supply of the System falling within the scope of Item 5 of Schedule 1 to the Minister's Determination, the ES describes the supplies as being those assisting with and/or supervising personal tasks of daily life to develop skills of the participant to live as autonomously as possible.

We consider that the supply of the System neither assists a participant in conducting their personal tasks of daily life nor supervises such tasks. As such we do not consider your supply of the System is covered by Item 5 of Schedule 1 to the Minister's Determination.

The ES also lists at Item 8, 'Assistive equipment for general tasks and demands' as kinds of supplies of supports that may be GST-free and describes such supplies as electronic personal organisers and alarms set up to enable a person with disability to organise, plan and maintain a schedule when unable to do so by standard means due to their disability.

The term '"electronic personal organiser" is not defined in the GST Act.

As discussed above, where a term is not defined in the relevant Act, it takes on its ordinary meaning

The Macquarie Dictionary (online version) defines an electronic personal organiser as:

· a small electronic device used to record appointments, store telephone numbers, etc; and

· a computer program comprising features such as a diary, address book, etc.

We do not consider the System falls within the definition of an 'electronic personal organiser' and does not enable a person with a disability to organise, plan and maintain a schedule. Furthermore we consider an electronic personal alarm to consist of an electronic device worn around the neck or wrist, or on one's clothing, which can be activated in an emergency to alert another party that assistance or help is required.

Given the above, the supply of the System will not be GST-free pursuant to section 38-38 of the GST Act.

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