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Ruling

Subject: GST and the supply and installation of hoists

Question 1

Is the supply and installation of ceiling hoists GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply and installation of ceiling hoists is GST-free under subsection 38-45(1) of the GST Act.

Question 2

Is the supply and installation of wall mounted hoists GST-free under subsection 38-45(1) of the GST Act?

Answer

Yes, the supply and installation of wall mounted hoists is GST-free under subsection 38-45(1) of the GST Act.

Question 3

Is the reinstallation of a ceiling hoist in a different location, at the request of the owner of the hoist, subject to the goods and services tax (GST)?

Answer

Yes, the reinstallation of a ceiling hoist in a different location, at the request of the owner of the hoist, is subject to GST.

Relevant facts and circumstances

The entity supplies and installs ceiling and wall mounted hoists.

The installation of the hoists is directly related to the entity's supply of the hoists.

Both types of hoists are specifically designed for people with disabilities and are not used for any purpose other than for the lifting of disabled persons.

The entity also reinstalls hoists in a different location at the request of the owner of the hoist and issues an invoice for the reinstallation and related incidental costs.

The entity is registered for GST.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1)

Reasons for decisions

Questions 1 and 2

Summary

The supply and installation of both the ceiling and wall mounted hoists is GST-free under subsection 38-45(1) of the GST Act where the supply and installation of the hoists is in the same transaction.

Detailed reasoning

Supply of hoists

Under subsection 7-1(1) of the GST Act, GST is payable on taxable supplies and taxable importations.

Section 9-40 of the GST Act provides that an entity must pay the GST payable on any taxable supply that it makes.

Under section 9-5 of the GST Act, an entity makes a taxable supply if:

1. it makes the supply for consideration

2. the supply is made in the course or furtherance of an enterprise that the entity carries on

3. the supply is connected with Australia, and

4. the entity is registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Where all of the above elements of section 9-5 of the GST Act are satisfied, there will be a taxable supply.

The input taxed provisions in Division 40 of the GST Act do not apply to the facts in this case. However, the GST-free provisions in Division 38 of the GST Act are relevant to this case.

Subdivision 38-B of the GST Act provides that certain goods and services relating to health are GST-free. Of relevance to this case is subsection 38-45(1) of the GST Act.

Under subsection 38-45(1) of the GST Act, the 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 A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)

§ is specifically designed for people with an illness or disability, and

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

An item will only be GST-free if it meets all the requirements of subsection 38-45(1) of the GST Act. A GST-free item is GST-free at all stages of the supply chain and not only when supplied to a person with an illness or disability.

First requirement

The first requirement is that the thing supplied must be covered by an item listed in the table in Schedule 3 to the GST Act or Schedule 3 to the GST Regulations.

Item 88 in the table in Schedule 3 to the GST Act (Item 88) lists 'manual, electric, ceiling track or pool hoist specifically designed for people with disabilities'.

The ordinary meaning of the word 'hoist' as defined in The Macquarie Dictionary, 2009, 5^th edn, The Macquarie Library Pty Ltd New South Wales is:

verb

1. to raise or lift, especially by some mechanical appliance

noun

4. an apparatus for hoisting, as a lift

The devices normally covered by Item 88 would be those devices that are used to lift an individual and transfer them, for example, from a bed to a wheelchair.

Item 88 also restricts the devices to those which are specifically designed for people with a disability.

The information that the entity has provided on the hoists they are specifically designed for people with disabilities and are only used for the purpose of lifting them.

As such, the hoists are covered by Item 88 and the first requirement in subsection 38-45(1) of the GST Act is satisfied.

Second requirement

The second requirement is that the thing supplied must be specifically designed for people with an illness or disability. The entity supplies hoists that are specifically designed for people with disabilities.

As Item 88 also requires that the device be specifically designed for people with a disability and we have already established that the hoists are covered by Item 88, the second requirement in subsection 38-45(1) of the GST Act is also satisfied.

Third requirement

The third requirement is that the thing supplied is not widely used by people without an illness or disability.

The hoists are not used for any purpose other than for the lifting of disabled persons. This indicates that the hoists are not widely used by people without disabilities. As such, this requirement is also satisfied.

As all the requirements in subsection 38-45(1) of the GST Act are satisfied, the entity's supply of the hoists is GST-free.

Installation of hoists

The GST Act does not provide for the supply of labour services relating to medical aids and appliances to be GST-free. For example, labour for the installation of a GST-free medical aid or appliance that is not provided by the supplier of the medical aid or appliance, or that is provided by the same supplier but in a later transaction that is distinct and separate to the supply of the medical aid or appliance, does not form part of the GST-free supply of the medical aid or appliance and is not GST-free under subsection 38-45(1) of the GST Act.

However, where the medical aid or appliance is supplied together with a labour component as part of one single transaction, the GST treatment of that transaction will depend on how the supply is characterised. A supply of a medical aid or appliance together with a labour component may be characterised in one of three ways:

1. the main supply is the GST-free medical aid or appliance and the labour is integral, ancillary or incidental to that main supply. In this case, there is a single GST-free supply of a medical aid or appliance (which includes the labour)

2. the main supply is the labour (as is usually the case for repair work) and the GST-free medical aid or appliance (or most commonly, its GST-free spare part) is integral, ancillary or incidental to that main supply. In this case, there is a single taxable supply of labour and the GST-free medical aid or appliance or spare part also becomes taxable, or

3. there are separately identifiable supplies of GST-free medical aids or appliances and labour, neither of which is integral, ancillary or incidental to the other. In this case, the supplies are partly taxable and partly GST-free and must be apportioned on a reasonable basis.

Some indicators that something may be integral, ancillary or incidental to another thing are:

§ it represents a marginal proportion of the total value of the package compared to the dominant part

§ it is necessary or contributes to the supply as a whole but cannot be identified as the dominant part of the supply

§ it contributes to the proper performance of the contract to supply the dominant part, and

§ a supplier would reasonably conclude that it does not constitute for customers an aim in itself, but is a means of better enjoying the dominant thing supplied.

Therefore, a part of a supply will be integral, ancillary or incidental to another part of the supply where it is insignificant in value or function, or merely complements the dominant part of the supply.

Where the installation is integral to the supply of the hoists, we consider that the installation of the hoists is not the dominant part of the supply and merely complements the main supply of the hoists.

The entity supplies and installs the hoists in a single transaction and the installation is directly related to the entity's supply of the hoists. In this case, we consider that the installation is integral to the supply of the hoists.

Therefore, the installation of the hoists forms part of the GST-free supply of the hoists under subsection 38-45(1) of the GST Act and will be GST-free.

Question 3

Summary

The reinstallation of the hoists in another location is a single supply of labour which is taxable under section 9-5 of the GST Act.

Detailed reasoning

Where a GST-free medical aid or appliance is installed by a supplier of the medical aid or appliance in a later transaction that is distinct and separate to the supply of the medical aid or appliance, the installation does not form part of the GST-free supply of the medical aid or appliance (see explanation above in questions 1 and 2 in relation to installation of hoists).

The entity also reinstalls hoists in a different location at the request of the owner of the hoist and issues an invoice for the reinstallation and related incidental costs.

In these circumstances, the entity is not making a supply of the hoist. The entity made the supply of the hoist in an earlier transaction and charged for the hoist at that time. The main supply in this later transaction is the labour involved in reinstalling the hoist in another location. The entity issues an invoice for the reinstallation and related incidental costs. We consider that there is a single supply of labour when the entity reinstalls the hoists.

As the entity is registered for GST and makes its supply of labour for consideration in the course of carrying on its enterprise in Australia, its supply satisfies all of the elements in section 9-5 of the GST Act, and is therefore, taxable.