Edited version of private advice

Authorisation Number: 1051804732282

Date of advice: 16 March 2021

Ruling

Subject: GST and medical aids and appliances

Question

Will the supply of the specified medical aid or appliance be a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

No.

This ruling applies for the specified period.

The scheme commences on the specified date.

Relevant facts and circumstances

You are an entity and you are registered for the goods and services tax (GST).

You are a supplier of the identified medical aid or appliance.

You supply the identified medical aid or appliance to hospitals and rehabilitation facilities.

The medical aid or appliance is specifically designed for people with an illness or disability; and is not widely used by people without an illness or a disability.

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 subsection 38-45(1)

Reasons for decision

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

(c)   the supply is connected with the indirect tax zone, such as Australia; and

(d)  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.

There are no provisions in Division 40 of the GST Act to make the supply of the medical aid or appliance input taxed.

Subdivision 38B of the GST Act determines those health services which are GST-free. Of relevance to this case is subsection 38-45(1) of the GST Act.

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

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

•         is specifically designed for people with an illness or disability, and

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

The supply of a medical aid or appliance is only GST-free where all of the above requirements in subsection 38-45(1) of the GST Act are satisfied.

There are no items in Schedule 3 or the GST Regulations that specifically list the specified medical aid or appliance or that are relevant to your product.

Therefore, the supply of the specified medical aid or appliance does not meet the first requirement of subsection 38-45(1) of the GST Act. Accordingly, the supply of your specified product is not a GST-free supply.

The supply of your product will be a taxable supply where all the requirements of section 9-5 of the GST Act are satisfied.

Additional information

A medical aid or appliance can only be GST-free if it is listed in Schedule 3 to the GST Act or the GST Regulations. The ATO cannot treat a medical aid or appliance as GST-free and cannot give a ruling that a medical aid or appliance is GST-free, if it is not listed in Schedule 3 to the GST Act or the GST Regulations.

Only the Australian Government - and not the ATO - can add new medical aids and appliances to Schedule 3 to the GST Act or the GST regulations.

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