ATO Interpretative Decision
ATO ID 2003/1159
Goods and Services Tax
GST and importation of air purification system for installation in a motor vehicleFOI status: may be released
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With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, an importer of medical aids and appliances, making a non-taxable importation under paragraph 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it imports an air purification system to be installed in a motor vehicle?
Decision
No, the entity is not making a non-taxable importation under paragraph 13-10(b) of the GST Act when it imports an air purification system to be installed in a motor vehicle.
The entity is making a taxable importation under section 13-5 of the GST Act.
Facts
The entity is an importer of medical aids and appliances. The entity imports an air purification system. The air purification system has been manufactured without the use of synthetic chemicals and is to be installed into a motor vehicle for use by a person with chemical sensitivities.
The entity is registered for goods and services tax (GST). The air purification system has been entered for home consumption within the meaning of the Customs Act 1901. The importation is not a non-taxable importation under Part 3-2 of the GST Act.
Reasons for Decision
Section 13-5 of the GST Act provides that the importation of goods into Australia is subject to GST if they are entered for home consumption within the meaning of the Customs Act 1901. However, an importation is not subject to GST if it is a non-taxable importation.
Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed.
Of relevance in this instance is subsection 38-45(1) of the GST Act, which provides that a supply of a medical aid or appliance is GST-free where the medical aid or appliance:
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- is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 2019(GST Regulations)
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- is specifically designed for people with an illness or disability, and
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- is not widely used by people without an illness or disability.
Item 58 in the table in Schedule 3 (Item 58) lists 'motor vehicle modifications'.
Item 58 refers to modifications made to a motor vehicle where:
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- the modification forms an integral part of the overall conversion
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- the conversion is specifically designed for people with disabilities, and
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- the converted vehicle is not widely used by people without an illness or disability.
In the circumstances, provision of the air purification system is the provision of a part that is to be installed and does not involve the actual modification of the motor vehicle. That is, it does not form an integral part of a conversion process of a motor vehicle at the point in time that it is received. As such, an air purification system is not covered by Item 58.
As the air purification system is not covered by Item 58, if there had been a supply to the entity (instead of an importation by the entity), the supply would not be GST-free under subsection 38-45(1) of the GST Act. As such, the entity is not making a non-taxable importation under paragraph 13-10(b) of the GST Act.
The importation of the air purification system by the entity meets the positive limbs of section 13-5 of the GST Act. Furthermore, the importation is neither a non-taxable importation under Part 3-2 of the GST Act nor would it have been GST-free under any other provision of Division 38 of the GST Act or input taxed under Division 40 of the GST Act, had the importation been a supply. As such, the entity is making a taxable importation under section 13-5 of the GST Act when it imports an air purification system to be installed in a motor vehicle.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 9 April 2019 | Throughout | Updated A New Tax System (Goods and Services Tax) Regulations 1999 to A New Tax System (Goods and Services Tax) Regulations 2019. |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 13-5
paragraph 13-10(b)
Division 38
Division 40
Part 3-2
subsection 38-45(1)
Schedule 3
Schedule 3 table item 58
The Regulations
Other References:
GST Pharmaceutical Health Forum - Issues Register - Attachment A
Tax fact sheet NAT 4651
Keywords
Goods & services tax
GST free
GST health
Section 38-45 - medical aids & appliances
GST imports
Taxable importations
ISSN: 1445-2782