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Edited version of your private ruling
Authorisation Number: 1012613127990
Ruling
Subject: GST and the supply of specified products
Question
Are you making a GST-free supply of the specified products under Subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Answer
No
Relevant facts and circumstances
You are registered for GST.
You supply the specified products to public and private hospitals in Australia.
When invoicing a particular product and related devices, no GST is charged by you as the product is listed as GST-free in Schedule 3 of the GST Act.
When you supply other specified products to hospitals, GST is charged on these products.
You are querying whether the above products should also be GST-free supplies as they are part of a GST-free medical service (surgery).
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-7(3)
A New Tax System (Goods and Services Tax) Act 1999 Section 38-20
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(2).
Reasons for decision
In this ruling, please note:
• All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise specified.
• All terms marked by an *asterisk are defined terms in the GST Act.
Section 9-40 provides that you are liable for GST on the taxable supplies that you make.
Section 9-5 states that:
You make a taxable supply if:
(a) you make the supply for *consideration
(b) the supply is made in the course or furtherance of an *enterprise that you *carry on
(c) the supply is *connected with Australia 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.
In your case, the supply is for consideration, is made in the course of your enterprise, is connected with Australia and you are registered for GST. Therefore, the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied.
The supply will be taxable unless it is GST-free or input taxed. It is considered that the provisions of the GST Act dealing with input taxed supplies will have no application to the supplies you have identified. Therefore, it needs to be determined whether the supply is GST-free.
Subsections 38-45(1) and 38-45(2) are concerned with medical aids and appliances. These subsections state:
(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).
The specified products are not covered under any of the items listed in Schedule 3 nor are they specified in the GST Regulations. As such, the supply of these items are not GST-free under subsection 38-45(1).
You have queried whether the above items should be GST-free as they are part of a GST-free medical service (surgery).
Subsection 38-7(3) states:
A supply of goods is GST-free if:
(a) it is made to an individual in the course of supplying to him or her a *medical service the supply of which is GST-free; and
(b) it is made at the premises at which the medical service is supplied.
As you are not the supplier of the medical service, subsection 37-7(3) does not have application in your case.
Section 38-20 is similar to subsection 38-7 (3) in that it outlines the application of GST to hospital treatment. It states:
(1) A supply of *hospital treatment is GST-free.
(2) …
(3) A supply of goods is GST-free if it is a supply that is directly related to a supply of *hospital treatment that is:
(a)(GST-free because of subsection (1); and
(b) Supplied by, or on behalf of, the supplier of the hospital treatment.
However, section 38-20 is also not applicable in your case as you are not supplying hospital treatment.
Therefore your supply of the specified products is not GST-free but taxable supplies.
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