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Ruling
Subject: Medical aids and appliances
Question
Is the supply of Product X a GST-free medical aid or an appliance?
Answer
No, the supply of the Product X is not a GST-free medical aid or an appliance.
Relevant facts and circumstances
You are carrying on an enterprise in Australia and are registered for the goods and services tax (GST).
You intend to market in Australia Product X which is to be used in the health industry.
The device can be used by individuals to record their medical details.
The purpose to which it is meant to be used is to prevent medical errors in prescribing medication.
The user can be any one with or without a medical condition.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Section 38-45
Reasons for decision
Section 9-5 of the GST Act states:
You make a taxable supply if:
o you make the supply for *consideration, and
o the supply is made in the course or furtherance of an *enterprise that*you carry on; and
o the supply is *connected with Australia; and
o 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 the GST Act.)
In your case, the supply of Product X satisfies the requirements of paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act. That is, you are selling the Product X for consideration, the sale is made in the course or furtherance of your enterprise, the supply is connected with Australia and you are registered for GST.
The supply of the product in the circumstances described is not input taxed as none of the provisions in Division 40 of the GST Act applies to its' sale. It remains to be determined whether the supply of the product is GST-free under any of the provisions in Division 38.
Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance is:
o covered by Schedule 3 of the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations),
o specifically designed for people with an illness or disability and
o not widely used by people without an illness or disability.
Product X is not listed as an item in Schedule 3 or the Regulations. Nor does it fall under any of the broad categories listed in column two of Schedule 3.
Further, the device is not specifically designed for people with an illness or disability because it can be used by anyone who wishes to keep a record of ones medical details in his or her person. It is also possible that people with or without an illness or disability to use the device.
For a medical aid or appliance to be GST-free, all of the three conditions listed under subsection 38-45(1) must be satisfied. In this case none of the three conditions is satisfied. As such the product you intend to supply as Product X is not GST-free.
Furthermore, as the sale of Product X satisfies all of the requirements of section 9-5 of the GST Act and as it is not excluded as input taxed or GST-free, it will be taxable and GST will be payable on its supply.