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Ruling
Subject: GST and health
Question
Can you be exempted from the GST on sales of all goods sold to the public and private hospital sector?
Answer
No, you cannot be exempted from the GST on sales of all goods sold to the public and private hospital sector.
Relevant facts and circumstances
You import goods from overseas and sell them solely to the health sector. Such goods, when provided with procedures or to patients are all covered by legislation or schedule 3 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
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 subsection 9-30(1)
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1)
Reasons for decision
Taxable Supplies
Under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), GST is payable on taxable supplies.
Section 9-5 of the GST Act provides that 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.
In accordance with section 9-5, you will be liable to remit GST on supplies of goods and services, unless such goods or services are GST-free or input taxed. It is considered that the provisions governing input taxed supplies have no application in relation to goods supplied by you.
Subsection 9-30(1) of the GST Act states that a supply is GST-free if:
(a) it is GST-free under Division 38 or under a provision of another Act; or
(b) it is a supply of a right to receive a supply that would be GST-free under paragraph (a).
There is no provision contained within Division 38 of the GST Act, which specifically provides that all goods and services supplied by an entity to another entity operating within the health industry are to be GST-free.
Similarly, the GST Act does not give the ATO authority to exempt an entity from charging GST, which makes supply to another entity operating within the health industry only.
Only those supplies of goods and services specifically made GST-free under Division 38 or under a provision of another Act can be supplied to public and private hospitals GST-free. It is important to emphasise that goods which are GST-free under subsection 38-45(1) of the GST Act, dealing with medical aids and appliances, are GST-free at all points in the supply chain.
Where section 9-5 of the GST Act is satisfied, supplies of goods and services not specifically made GST-free under Division 38 or a provision of another Act will be taxable supplies and will be subject to GST.