Edited version of private advice

Authorisation Number: 1052349253698

Date of advice: 31 January 2025

Ruling

Subject: GST - medical supplies

Question 1

Is your supply of medical supplies GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Your supply of medical supplies is GST-free under subsection 38-45(1) of the GST Act, where the medical supplies is designed for people with an illness or disability and is not widely used by people without an illness or disability.

Your supply of medical supplies is not GST-free under subsection 38-45(1) of the GST Act, where the medical supply is designed, or widely used by people in the general community, merely for the prevention of an illness or disability. The supply of these medical supplies is a taxable supply where the requirements of section 9-5 of the GST Act are otherwise satisfied.

The scheme commenced on:

DD MM YYYY

Relevant facts and circumstances

You are a supplier of registered medical devices.

You supply a range of medical supplies.

For the purposes of subsection 38-45(3) of the GST Act, you have not entered into any agreements with recipient/s to not treat your supplies as GST-free supplies.

Your medical supplies are classified against either a XXX class (XXX), or a level of XXX of XXX (XXXX).

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 section 38-45

A New Tax System (Goods and Services Tax) Regulations 2019 section 38-45.01

Reasons for decision

Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free if:

(a)           it is covered by Schedule 3 to the GST Act or specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST 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.

Medical aid covered by the GST Regulations

For the purposes of paragraph 38-45(1)(a) of the GST Act, item 7 of the table in subsection 38-45.01(1) of the GST Regulations specifies a 'compression garment.'

We consider 'compression garment' to mean a covering designed to be worn or applied to a particular part of the body which exerts sufficient pressure on the wearer to be of therapeutic benefit.

Your medical supplies are items, in satisfaction of paragraph 38-45(1)(a) of the GST Act.

Medical aid specifically designed for, and not used by people without, an illness or disability

To satisfy paragraph 38-45(1)(b) of the GST Act, the medical supply must be both:

•                     specifically designed for people with an illness or disability; and

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

Medical supplies that are designed, or widely used by people in the general community, merely for the prevention of illness or disability will not satisfy the requirements of paragraph 38-45(1)(b) of the GST Act. This includes medical supplies designed for, or widely used by, people:

•                     who stand for long periods of time;

•                     who are pregnant; or

•                     for general prevention of illness or conditions.

The indications or therapeutic uses of some of your products are for everyday use as a preventative measure for XXX health and comfort, as well as maintaining XXX health during travel.

Therefore, we consider those medical supplies do not satisfy the requirements of paragraph 38-45(1)(b) of the GST Act. Accordingly, your supply of those medical supplies is not GST-free under subsection 38-45(1) of the GST Act. Your supply of those products is a taxable supply where the requirements of section 9-5 of the GST Act are otherwise satisfied.

You describe the indications or therapeutic uses of some of your products as being for the treatment of serious medical conditions and to assist with healing.

We take the view that those medical supplies are designed for people with an illness or disability and are not widely used by people without an illness or disability. Accordingly, those medical supplies satisfy paragraph 38-45(1)(b) of the GST Act.

GST-free supply

Your supply of medical supplies designed for people with an illness or disability, and not widely used by people without an illness or disability, is GST-free under subsection 38-45(1) of the GST Act.

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