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Edited version of private ruling
Authorisation Number: 1011683594242
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Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Question
Is GST payable by you on your supplies of the following software programs?
· Software program 1
· Software program 2
· Software program 3
· Software program 4
Answer
No.
Relevant facts and circumstances
You sell the following software programs:
· Software program 1
· Software program 2
· Software program 3
· Software program 4
You supply the software programs wholly within Australia.
The purpose for which each software program is used/Who uses each of the software programs?:
· Software program 1 is used by a support person for someone with a disability to do certain things. The resources made with software program 1 are then used by the person with a disability to assist them to do certain things.
· Software program 2 is used by a person with a disability to do certain things. It can also be used for the same purpose as software program 1.
· Software program 3 is used by a person with a disability to do certain things. It can also be used for the same purpose as software program 1.
· Software program 4 can be used by someone with a disability to do certain things. The certain feature allows the user to do a certain thing. It can also be used for the same purpose as software program 1 and software program 2.
You detailed the disabilities that each software program has been designed for.
You detailed the special features which make each software program suitable for people with disabilities.
You detailed how the special features assist people with a disability.
Whether the special features are useful for people without an illness or disability:
· Software program 1: A certain feature may help all certain sorts of people to do a certain thing.
· Software program 2: A certain feature may help all certain sorts of people to do a certain thing.
· Software program 3: A certain feature may help all certain sorts of people to do a certain thing.
· Software program 4: A certain feature may help all certain sorts of people to do a certain thing.
Whether certain sorts of people would generally use each of the software programs in any of a certain type of setting:
· Software program 1, software program 2 and software program 3 could be used in any of a certain type of setting, although they are primarily used to support people with disabilities in mainstream and special settings.
· Software program 4 would only be used by the person with a disability themselves.
· Even though the software programs were initially designed for people with disabilities, these programs are sometimes used by people without a disability. Towards this aim, the developer now promotes the programs to all areas of a certain field.
The software programs are purchased by certain sorts of organisations and families for certain sorts of purposes.
The manufacturer of the software family commissioned market research in a certain year, which indicated that a certain percentage of software programs from this family sold were being used to support people with disabilities.
The dominant market for the software family is individuals with disabilities/special needs who benefit from a certain feature - either to achieve a certain thing or to assist their participation in certain fields/areas. This is the group that the software is designed to support.
The features of software program 4 would not be useful for people without an illness or disability.
Reasons for decision
Summary
GST is not payable on your sales of the software programs as they are GST-free supplies of medical aids or appliances under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Detailed reasoning
GST is payable by you on your taxable supplies.
You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:
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 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.
(*Denotes a term defined in section 195-1 of the GST Act)
You satisfy the requirement of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you supply the software programs for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, these supplies are connected with Australia and you are registered for GST.
There are no provisions in the GST Act under which your supplies of the software programs are input taxed. Therefore, what remains to be determined is whether your supplies of the software programs are GST-free.
Medical aids and appliances
Subsection 38-45(1) of the GST Act provides that a 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, or specified in the table in the A New Tax System (Goods and Services Tax) Regulations 1999;
· is specifically designed for people with an illness or disability; and
· is not widely used by people without an illness or disability.
Item 8 in the table in Schedule 3 to the GST Act lists 'software programs specifically designed for people with disabilities.
We consider that the software programs in your case are specifically designed for people with disabilities because you advised that:
The purpose for which each software program is used/Who uses each of the software programs?
· Software program 1 is used by a support person for someone with a disability to do certain things. The resources made with software program 1 are then used by the person with a disability to assist them to do certain things.
· Software program 2 is used by a person with a disability to do certain things. It can also be used for the same purpose as software program 1.
· Software program 3 is used by a person with a disability to do certain things. It can also be used for the same purpose as software program 1.
· Software program 4 can be used by someone with a disability to do certain things. The certain feature allows the user to do a certain thing. It can also be used for the same purpose as software program 1 and software program 2.
You detailed the disabilities that each software program has been designed for.
You detailed the special features which make each software program suitable for people with disabilities.
You detailed how the special features assist people with a disability.
We consider that the software programs would not be widely used by people without an illness or disability as you advised that:
· The software programs are purchased by certain sorts of organisations and families for certain sorts of purposes.
· The dominant market for the software family is individuals with disabilities/special needs who benefit from a certain feature - either to achieve a certain thing or to assist their participation in certain fields/areas. This is the group that the software is designed to support.
· The manufacturer of the software family commissioned market research, which indicated that a certain percentage of software from this software family sold were being used to support people with disabilities.
· Software program 1, software program 2 and software program 3 are primarily used to support people with disabilities in certain settings.
· Software program 4 would only be used by the person with a disability themselves.
· The features of software program 4 would not be useful for people without an illness or disability.
Therefore, the software programs satisfy all of the requirements of subsection 38-45(1) of the GST Act. Hence, your supplies of these programs are GST-free supplies under that provision.
As not all of the requirements of section 9-5 of the GST Act are satisfied, your supplies of the software programs are not taxable supplies. Therefore, GST is not payable on your supplies of the software program.
However, in accordance with subsection 38-45(3) of the GST Act, a supply is not GST-free under subsection 38-45(1) of the GST Act if the supplier and the purchaser have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.