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Ruling
Subject: GST and medical aids and appliances
Question
Is the supply of your products 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 of your products is GST-free under subsection 38-45(1) of the GST Act.
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You have introduced products that monitor the full haemodynamic parameter range and display this information in a similar manner. They all use the same algorithms to analyse the cardiac patterns and display these variances and alarms accordingly.
The products have an integrated computerised analysis system that continually assesses up to four leads of ECG for the presence of arrhythmia.
Relevant legislative provision
A New Tax System (Goods and Services Tax) Act 1999 section 38-45
Reasons for decision
Under subsection 38-45(1) of the GST Act, a supply of a medical aid or appliance is GST-free if the medical aid or appliance:
§ is covered by Schedule 3 to the GST Act, or in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations); and
§ is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.
Paragraph 38-45(1)(a) - covered by Schedule 3
Item 1 of Schedule 3 to the GST Act (Item 1) lists 'heart monitors' as a specified medical aid and appliance for the purposes of paragraph 38-45(1)(a) of the GST Act.
The term 'heart monitors' is not defined in the GST Act; and thus, will take on its ordinary meaning unless the term has a special or technical meaning. Where a term has a special meaning, it is necessary to determine its meaning by reference to the industry to which that term relates.
The Stedman's Medical Dictionary (2000) defines a cardiac (heart) monitor to mean: 'an electronic monitor which, when connected to the patient, signals each heartbeat with a flashing light, an electrocardiographic curve, an audible signal, or all three.' As such, it is considered that a device with the primary function of monitoring a patient's heartbeat is a 'heart monitor'; and is covered by Item 1.
Your products have an integrated computerised ECG program used to determine the presence of arrhythmia. They all use the same algorithms to analyse cardiac patterns. Therefore, it is considered that your products are heart monitors for the purpose of Item 1. The requirement in paragraph 38-45(1)(a) of the GST Act is satisfied.
Paragraph 38-45 (1)(b) - specifically designed for people with an illness or disability, and not widely used by people without an illness or disability
A medical aid and appliance is specifically designed for people with an illness or disability if it is created with the intention of having certain features or characteristics that would be of benefit to people with an illness or disability.
For the purpose of paragraph 38-45(1)(b) of the GST Act, the word 'use' does not connote exclusive use. A medical aid and appliance may be operated and used by medical personnel; but, there is a concurrent or simultaneous passive use by the patient.
Based on the information provided, your products are designed to contain features that will be of benefit to people with an illness or disability. The products are not widely used by people without an illness or disability, given that the products are designed to be used on patients and may be of little or no use if not connected to a patient. Therefore, the requirement in paragraph 38-45(1)(b) of the GST Act is satisfied.
The supply of your products is a GST-free supply of medical aids and appliances.
Subsection 38-45(3) of the GST Act
Note that, in accordance with subsection 39-45(3) of the GST Act, the supply of your products is not GST-free if you and the recipient have agreed that the supply not be treated as GST-free.