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Ruling

Subject: Goods and services tax (GST) and medical aids and appliances

Question

Will GST be payable on your sale of the (brandname) sleep positioning system?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You will sell a sleep positioning system called (brandname).

You will supply the product wholly within Australia.

Your product is designed to position a person's body on their side while sleeping, which helps reduce snoring.

Your product is comprised of foam parts, fabric covers and protective covers. The foam parts are (certain parts):

Your product does not contain a timber board.

You provided the marketing material. The marketing material provides the following information:

· Your product is a sleep positioning system, which helps reduce snoring.

· Your product assists a sleeper to get sufficient oxygen.

· Snoring can cause health problems.

· Snoring can be caused by sleep apnoea.

· Your product positions a person on their side, which enables air passages to remain open, which enables better breathing.

· Instructions for the user to place your product on the mattress on which the user sleeps.

· You do not market the product as a side lying board.

· Your main market for the product will be sleep clinics and chiropractors.

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)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 182-10(2)(c)

A New Tax System (Goods and Services Tax) Act 1999 section 182-15

Reasons for decision

Summary

GST will be payable on your sale of the product in question as the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) will be satisfied.

Your sale of the product is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act as the product is not covered by an item in Schedule 3 to the GST Act or Schedule 3 to the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

Detailed reasoning

GST is payable by you where you make a taxable supply.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

· you make the supply for *consideration; and

· the supply is made in the course or furtherance of an *enterprise that

· you *carry on; and

· the supply is *connected with Australia; and

· 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 term defined in section 195-1 of the GST Act)

You will satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

· you will supply the product for consideration

· you will supply the product in the course or furtherance of an enterprise that you carry on

· these supplies will be connected with Australia, and

· you are registered for GST.

There are no provisions in the GST Act under which your sales of the product will be input taxed.

Therefore, what remains to be determined is whether your sales of the product will be GST-free.

Medical aids and appliances

A sale of a medical aid or appliance may be GST-free under subsection 38-45(1) of the GST Act, which states:

A supply is GST-free if:

(a) it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and

(b) the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.

You believe that your sale of the product in question will be a GST-free supply of a medical aid or appliance under section 38-45 of the GST Act. You highlighted items 81. 82, 87,127 and 128 in Schedule 3 to the GST Act.

We shall now consider these items.

Side lying boards

Item 81 in Schedule 3 to the GST Act (item 81) lists 'side lying boards'

Products in the medical aids and appliance industry that are marketed as side lying boards are designed to position a person's body in a sideways position while resting or playing. Their features include a cushioned timber board base and a vertical back support. Additionally, side lying boards are not used on a bed and they are on their own stand.

Your product is designed to position a person's body on their side while sleeping. However, it does not include a timber board base and it is used on a bed. Furthermore, your product is not marketed as a side lying board. Hence, your product is not a side lying board. Therefore, your product is not covered by item 81.

Night time positioning equipment modifications

It is considered that item 82 in Schedule 3 to the GST Act, which lists 'night-time positioning equipment modifications', refers to modifications necessarily made to night-time positioning equipment in order to enable correct positioning of a person to suit their particular condition or disability during sleep. The item is clear in that it is the modifications to such night-time positioning equipment, rather than the night-time positioning equipment itself, that is covered by this item number.

Your product is not a modification to night time positioning equipment. Therefore, your product is not covered by item 82.

Cushions specifically designed for people with disabilities

Item 87 in Schedule 3 to the GST Act (item 87) is listed under the category heading 'Mobility of people with disabilities - physical: seating aids'.

Even though the category headings in Schedule 3 are not operative parts of Schedule 3, they may be used in determining the meaning of a term listed in column three if the meaning of the term listed in column three is ambiguous or obscure (paragraph 182-10(2)(c) of the GST Act and section 182-15 of the GST Act).

The term 'cushions' at item 87 is ambiguous. Therefore, we shall consider the category heading to determine what sort of items are covered by item 87.

The category heading specifically states 'seating aids'. As such, it is considered that item 87 covers cushions used by people requiring support while seated, for example, cushions used by people in wheelchairs. This means that, for the purposes of Item 87, a cushion does not include a product that is designed to help with positioning a person while sleeping in bed. Your product is not used by people requiring support while seated. Therefore, your product is not covered by item 87.

Respiratory appliance accessories

Item 127 in Schedule 3 to the GST Act (item 127) lists 'respiratory appliance accessories'.

A respiratory appliance accessory is an accessory for a respiratory appliance. Your product is not an accessory for a respiratory appliance, for example, a respirator. Therefore, your product is not covered by item 127.

Sleep apnoea machines

Item 128 in Schedule 3 to the GST Act (item 128) lists 'sleep apnoea machines'.

A sleep apnoea machine is a machine that provides a constant stream of air which keeps breathing passages open while a person is sleeping. It is used by people with sleep apnoea. The person wears a mask when using the machine.

Your product is not a machine that provides a constant stream of air which keeps breathing passages open while a person is sleeping. Hence, your product is not a sleep apnoea machine. Therefore, your product is not covered by item 128.

Your product is not covered by any other items in Schedule 3 to the GST Act or any items in Schedule 3 to the GST Regulations.

Therefore, your sale of the product is not GST-free under subsection 38-45(1) of the GST Act.

There are no other provisions of the GST Act under which your sale of the product is GST-free.

Hence, as all of the requirements of section 9-5 of the GST Act will be satisfied, you will make a taxable supply. Therefore, GST will be payable on your sale of the product.