Edited version of private ruling

Authorisation Number: 1011713528663

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Ruling

Subject: GST and Medical aids and appliances

Question 1

Is the supply of the electronically operated adjustable beds GST-free in accordance with section 38-45 of the A New System (Goods and Services) Act 1999 (GST Act)?

Answer

Yes, the supply of the electronically operated adjustable beds is GST-free in accordance with section 38-45 of the GST Act.

Question 2

Is the supply of the mattresses GST-free in accordance with section 38-45 of the GST Act?

Answer

No, the supply of the mattresses is not GST-free in accordance with section 38-45 of the GST Act.

Relevant facts and circumstances

You are registered for GST.

You have advised:

· Your beds are adjustable electronically, the head and upper torso can be horizontal or may be lifted to near vertical or any position within the two extremes.

· Your mattresses have been specifically designed for people who:

· need superior bed rest

· need to spend prolonged periods in bed

· suffer from spinal stiffness and pain due to poor spinal alignment, or

· experience difficulties from high pressure on their body when laying on a bed.

· The reason the mattresses have been specifically designed this way is because they:

· decrease pressure on body surface especially hips and shoulders

· alleviate neck and upper shoulder stiffness caused by poor alignment

· decrease pressure and pain of frozen shoulders

· improve support and decrease spinal dis-alignment (therefore stiffness and pain).

· Your mattresses and the electronically adjustable beds are all specifically designed for people with an illness or disability, and are not widely used by people without an illness or disability.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Sections 38-45.

Detailed reasoning

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) 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 defined term in section 195-1 of the GST Act)

In this case, you make the supplies for consideration in the course of your enterprise. The supplies are connected with Australia and you are registered for GST. Therefore, the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied, and you will be liable for GST on the supplies you make unless they are GST-free or input taxed. It is not considered that the provisions of the GST Act or any other Act dealing with input taxed supplies have any application to the supply of the various items. However, we need to consider whether your supplies are GST-free.

GST-free medical aids and appliances

Subsection 38-45(1) of the GST Act outlines the circumstances in which the supply of certain medical aids and appliances will be GST-free. This subsection states:

Medical aids and appliances

(1) A supply is GST-free if:

(a) it is covered by Schedule 3 (medical aids and appliances), or specified in the 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.

Subsection 38-45(1) of the GST Act essentially has three elements, all of which must be satisfied before a supply can be considered GST-free. The supply must be:

· specifically listed in Schedule 3 to the GST Act or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)

· specifically designed for people with an illness or disability, and

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

All the above requirements must be satisfied before a medical aid or appliance is considered to be GST-free.

 Note that medical aids and appliances satisfying all three requirements are GST-free at every point in the supply chain. For example, a manufacturer of a GST-free medical aid or appliance can supply it GST-free to a wholesaler, the wholesaler can supply it GST-free to a retailer and, in turn, the retailer can supply it GST-free to the end user.

Electrically adjustable beds

Item 60 in the table in Schedule 3 lists 'electronically operated adjustable beds'.

You have advised the beds you supply are electronically operated and are capable of being adjusted to various levels and positions. The beds are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability.

Therefore, supplies by you of the electrically adjustable beds satisfy all the requirements of subsection 38-45(1) of the GST Act and are GST-free.

Mattresses

Item 66 in the table in Schedule 3 lists 'pressure management mattresses and overlays'. A mattress will be a 'pressure management mattress' where it is designed to provide comfort and prevent bed sores by evenly distributing the pressure exerted by the mattress on a person's body.

You have advised that the supply of mattresses have been specifically designed for people who:

· need superior bed rest

· need to spend prolonged periods in bed

· suffer from spinal stiffness and pain due to poor spinal alignment, or

· experience difficulties from high pressure on their body when laying on a bed.

You have also advised the reason the mattresses have been specifically designed this way is because they:

· decrease pressure on body surface especially hips and shoulders

· alleviate neck and upper shoulder stiffness caused by poor alignment

· decrease pressure and pain of frozen shoulders

· improve support and decrease spinal dis-alignment (therefore stiffness and pain).

You have advised that the mattresses are all specifically designed for people with an illness or disability, and are not widely used by people without an illness or disability.

We consider the mattresses do not fall within item 66 in the table in Schedule 3 to the GST Act or the GST Regulations as they are not a 'pressure management mattress' that is designed to prevent bed sores by evenly distributing the pressure exerted by the mattress on a person's body. The mattresses also do not fall within any other item, including item 68, in the table in Schedule 3 to the GST Act or the GST Regulations. Therefore, the mattresses cannot be classified as being GST-free medical aids and appliances in accordance with subsection 38-45(1) of the GST Act.

You are registered for GST and the supply of the mattresses satisfies the other positive limbs of section 9-5 of the GST Act. Therefore, you are making a taxable supply under section 9-5 of the GST Act when you supply the particular range of mattresses and accordingly their sale is subject to GST.