Edited version of private ruling

Authorisation Number: 1011795091770

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Ruling

Subject: GST and medical aids and appliances

Questions

1. Is the supply of the vibrating watches and spare parts a taxable supply?

Answer: Yes. The supply of the vibrating watches and spare parts is a taxable supply.

2. Is the supply of the vibrating clocks and spare parts a taxable supply?

Answer: Yes. The supply of the vibrating clocks and spare parts is a taxable supply.

3. Is the importation of vibrating watches and spare parts a taxable importation?

Answer: Yes. The importation of vibrating watches and spare parts is a taxable importation.

4. Is the importation of vibrating clocks and spare parts a taxable importation?

Answer: Yes. The importation of vibrating clocks and spare parts is a taxable importation.

Facts

You are registered for goods and services tax (GST). You import the vibrating watches and vibrating clocks (products) from overseas and sell them in Australia.

You claimed that the products are especially designed and suitable for people who are hearing or vision impaired. The products alert hearing and/or vision impaired people to the danger of missing their medications and other personal care tasks which could place themselves and their health in danger.

The vibrating watches allow for a number of alarms per day depending on the model chosen. The vibrating function can be used with the audible alarm or independently on its own. They can be used as a reminder for a variety of tasks such as medication, nutritional and continence issues.

The vibrating clocks can be connected with a vibrating bed shaker which placed under the mattress. They then can shake awake or alert the person when the alarm is due.

You contented that the products are covered by Items 44, 47 and 151 in the table in Schedule 3 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

You also advised that although the products are used primarily by the hearing and vision impaired people, they may also be used as enuresis alarm as per Item 19 in Schedule 3 of the GST Act (Schedule 3) to control bedwetting, or as an incontinence appliance as per Item 20 in Schedule 3 in delivering a reminder aid for toileting.

Reasons for decisions

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you must pay the GST payable on any taxable supply that you make.

Section 9-5 of the 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). 

For the supply of the products and their spare parts to be a taxable supply, all of the requirements listed in section 9-5 of the GST Act must be satisfied.

Based on the information provided, you have satisfied the requirements in paragraphs 9-5(a) to

9-5(d) of the GST Act as follows:

· the supply of the products is for consideration

· the supply of the products is made in the course of the business that you carry on

· the supply is connected with Australia as the products are made available or delivered in Australia, and

· you are registered for GST.

Therefore, the supply of the products will be taxable to the extent that they are not input taxed or GST-free.

There is no provision in the GST Act for the supply of the products to be input taxed. What remains to be considered is whether the supply of the products is GST-free.

1. & 2. Supply of the products

Division 38 of the GST Act sets out the supplies that are GST-free. Supplies of certain medical aids and appliances are GST-free where the requirements of subsection 38-45(1) of the GST Act are met. This provision provides that a supply is GST-free if:

· it is covered by Schedule 3 (medical aids and appliances) of the GST Act or specified in the regulations to the GST Act

· the thing supplied is specially designed for people with an illness or disability; and

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

You contend that the products are covered under Items 19, 20, 44, 47 and 151 in Schedule 3 of the GST Act. These Items are considered in the following paragraphs.

Item 19 enuresis alarms

The primary function of enuresis alarms covered in Item 19 is to alert people of the occurrence of enuresis. That is, items such as alarms for bedwetting, wetness alarms.

You have advised that the products can be used by people that suffered from incontinence to control bedwetting by delivering a reminder aid for toileting. They are not designed to alert people for the occurrence of enuresis. Therefore, the products are not covered by Item 19.

Item 20 incontinence appliance

The phrase 'incontinence appliance' is not defined in the GST Act. Where a term is not defined in the relevant Act, it takes on its ordinary meaning, unless the term has a special or technical meaning. Therefore, it is appropriately to examine the ordinary meaning of this phrase.

The word 'incontinence' is defined in Australian Oxford Dictionary to mean 'unable to control movements of bowels or bladder or both' and 'appliance' to mean 'a device or piece of equipment used for a specific task …'

In the context of medical aids and appliances, the Stedmans Medical Dictionary (2000), 27^th edition, Lippincott Williams & Williams, Baltimore, defines 'appliance' to mean 'a device used to improve function of a part, or for therapeutic purposes. It also defines device as meaning 'an appliance, usually mechanical, designed to perform a specific function, such as prosthesis or orthosis.

Therefore, an incontinence appliance' for the purpose of Item 20 must be an appliance that is used to treat incontinence. The products are a reminder aid for toileting and is not designed and used in treating bowel or bladder control problems. As such, we consider that they are not an incontinence appliance for the purposes of Item 20.

Item 44 visual display units specifically designed for deaf people, or for people with speech impairment, to communicate with others

The term visual display units refers to devices that receive information and display the information on their screens such as computer monitors, units that display a persons speech in written form or similar devices. In addition, the visual display unit must have been designed for deaf people, or people with speech impairment, to communicate with others. It means that the visual display unit must be an item which directly enable or assist a person to communicate with others.

The products are not visual display units. In addition, they are not a device that enables a person to communicate directly with others. As such they do not fall within Item 44.

Item 47 visual/tactile alerting devices

To be a visual/tactile alerting device within the meaning of Item 47, the device must be primarily designed to alert hearing impaired people to a strong occurrence, danger or presence.

The products are not primarily designed to alert hearing impaired people to a strong occurrence, danger or presence. Alerting a person that they have failed to take medication at the appropriate time is not consistent with warning of a strong occurrence, danger or presence. Therefore, the products are not covered by Item 47.

Item 151 auditory/tactile alerting devices

Similar with Item 47, to be an auditory/tactile alerting device within the meaning of Item 151, the device must be primarily designed to alert vision impaired people to a strong occurrence, danger or presence.

The products are not primarily designed to alert vision impaired people to a strong occurrence, danger or presence. They are not covered by item 151 for the same reason explained for Item 47.

In summary, the products are not covered by any Items in Schedule 3 or specified in the GST Regulations. Therefore, they do not satisfy the first element in subsection 38-45(1) of the GST Act. This means that the supply of the products is not a GST-free supply of medical aid or appliance.

As discussed, your supply of the products satisfies all the conditions in section 9-5 of the GST Act, therefore, it is a taxable supply and is subject to GST.

Supply of spare parts for the products

Subsection 38-45(2) of the GST Act provides that a supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designated as a spare part for, another thing the supply of which would be GST-free under subsection 38-45(1) of the GST Act.

It has been determined that the supply of the products is a taxable supply and not a GST-free supply. As such, the supply of their spare parts is not GST-free. Your supply of the spare parts satisfies all conditions in section 9-5 of the GST Act and is therefore a taxable supply.

3 & 4. Importation of the products and spare parts

GST is payable on all taxable importation of goods into Australia.

Subsection 13-5(1) of the GST Act states:

(1) You make a taxable importation if:

(a) goods are imported; and

(b) you enter the goods for home consumption (within the meaning of the Customs Act 1901).

However, the importation is not a taxable importation to the extent that it is a *non-taxable importation.

You advised that you are the importer and seller of the products. Therefore, you satisfy paragraphs 13-5(1)(a) and 13-5(1)(b) of the GST Act.

Section 13-10 of the GST Act provides the meaning of non-taxable importation. It states:

An importation is a non-taxable importation if:

(a) it is a non-taxable importation under Part 3-2; or

(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.

It has been determined that the supply of the products and spare parts is not GST-free nor input taxed. Therefore, paragraph 13-10(b) of the GST Act does not apply and the importation of the products and spare parts is a taxable importation under the GST Act.

For paragraph 13-10(a) of the GST Act to apply, the products must be covered by any of the items in Schedule 4 to the Customs Tariff Act 1995 as referred to in Part 3-2 GST Act. Unless it is determined that the products are covered by any of those items, the importation of the products will not constitute a non-taxable importation under the GST Act.

The Customs Tariff Act 1995 is administrated by the Customs. You may contact Customs who will determine whether the importation of the products is a non-taxable importation under the Customs Tariff Act 1995.