Edited version of private ruling

Authorisation Number: 1011683669380

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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

· Software program 5.

Answer

No.

Relevant facts and circumstances

You sell the following software programs:

· Software program 1

· Software program 2

· Software program 3

· Software program 4

· Software program 5.

You supply the software programs wholly within Australia.

Each of the software programs is used in certain sorts of organisations for certain sorts of people who have certain sorts of disabilities.

The software programs have been designed to assist persons with certain sorts of disabilities.

You detailed the special features which make each software program suitable for people with a disability.

You detailed how the special features assist people with a disability:

The content of each of the software programs is designed to meet a certain thing, so the content would definitely be of interest to people without an illness or a disability. Certain features would be appealing to people without an illness or a disability, but certain sorts of people might not wish to make the features that help people with disabilities available to certain sorts of people who do not need them. The certain options would be considered cumbersome to people who can access the programs directly using a keyboard and/or a mouse.

You imagine certain sorts of people would use the software programs in any of a certain sort of setting, and they would be beneficial to people in that setting, especially in certain situations. However, given the relatively high cost of these computer programs, you believe certain sorts of people would typically opt for cheaper certain sort of software programs that are available; except in a certain situation.

The majority of your sales of these software programs are to certain sorts of organisations. The main purpose being to offer the features listed above, which assist certain sorts of people with certain sorts of disabilities.

It is in the interests of the developer to promote the software to mainstream something in order to maximise sales. Their promotional efforts help to mainstream the software so that a certain thing does not happen to certain sorts of people with disabilities. Many of the features in the programs are inherently attractive to all a certain sort of person, including people who do not need them. Non-disabled people sometimes use the software programs.

Other features, such as certain options, are only available as and when selected from a certain menu. As certain sorts of organisations across Australia struggle with certain sorts of issues, they consider many options for improved certain sort of methodologies and tools. Perhaps these programs have been suggested by certain sorts of people who have found success using them, however, your sales to date would indicate that they are far from widely used across all a certain sort of organisation. You believe this is because there are cheaper, perhaps Australian designed alternatives that do not have the expensive options included for people with disabilities.

Your understanding is that Systems Administrators seek to avoid the need to run around installing programs on specific machines, and the need to check that they have not exceeded their software licence limit each time, by purchasing a certain sort of organisation site licence which then makes the programs available on all computers. The cost for doing so is not prohibitive and is therefore cost effective in terms of their time. The added benefit is that it is available to all people who wish to use the programs, and certain sorts of people with disabilities are not restricted to specific computers. Certain sorts of people will assign computer tasks to each certain sort of person using software appropriate for their specific needs, according to their individual something. To offer these software programs to certain sorts of people without a disability could at best offer them unnecessary compensatory something facilities, and at worse impede a certain thing.

You sell to certain sorts of organisations and occasionally to parents of children with disabilities.

Your understanding is that the developer envisages the software being used in all a certain sort of organisation, being available for all certain sorts of people who can benefit from the features built into the programs, including those available for people with certain sorts of disabilities.

The dominant market would be certain sorts of organisations that wish to offer certain principles for all their certain sorts of people, which include their certain sorts of people with disabilities. This observation is based on your sales records and communication with certain sorts of people using (or seeking to use) the programs in their certain sort of organisation.

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

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 and licences 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 Schedule 3 to 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 software programs have been designed to assist persons with certain sorts of disabilities.

· Certain special features make each software program suitable for people with a disability.

· Certain special features assist people with a disability in certain ways.

We consider that the software programs would not be widely used by people without an illness or disability, because you advised that:

· The majority of your sales of these software programs are to certain sorts of organisations. The main purpose being to offer the features listed above, which assist people with certain sorts of disabilities.

· Your sales to date would indicate that the software programs are far from widely used across all a certain sort of organisation. You believe that this is because there are cheaper, perhaps Australian designed alternatives that do not have the expensive options included for people with disabilities.

· To offer these software programs to certain sorts of people without a disability could at best offer them unnecessary compensatory something facilities, and at worse impede a certain thing.

Therefore, the software programs satisfy the requirements of subsection 38-45(1) of the GST Act. Hence, your supplies of these programs are GST-free.

As not all of the requirements of section 9-5 of the GST Act are satisfied, you do not make taxable supplies of the software programs.

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.