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Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Question
Will GST be payable on your sales of the product?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You will sell a product.
You will supply the product wholly within Australia.
Your product is a device designed to be used for support by a person whose ability to walk is impaired. Your product assists a person with walking. Your product is designed to support a person while they are mobile.
Your brochure sets out the features of the product.
Your product does not have additional special characteristics or functions (that is, additional to assisting someone with walking).
Your product is not made or adapted to the specific illness or disability of a particular person.
Your brochure aims the product at people with illnesses or disabilities.
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 section 38-45
Reasons for decision
Summary
GST will not be payable on your sales of the product, as they will be GST-free supplies of a medical aid or appliance (a walking frame) under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
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:
(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.
(*Denotes a term defined in section 195-1 of the GST Act)
You satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act 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
· the 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 your product are input taxed.
Therefore, what remains to be determined is whether your sales of the product are GST-free.
A supply of a medical device is GST-free under subsection 38-45(1) of the GST Act if:
(a) the device is covered by Schedule 3 to the GST Act or specified in the GST 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.
Item 98 in Schedule 3 to the GST Act lists 'walking frames - standard adult'.
Item 99 in Schedule 3 to the GST Act lists 'walking frames- standard child'
Item 100 in Schedule 3 to the GST Act lists 'walking frames - specialised'
The meaning of walking frame as defined in The Macquarie Dictionary, 2009, 5th edn, The Macquarie Library Pty Ltd New South Wales is:
A frame designed to be used for support by a person whose ability to walk is impaired.
Walking frames assist people with walking.
A walking frame is designed to support a person while they are mobile.
Item 100 in Schedule 3 to the GST Act covers walking frames that have additional special characteristics or functions (that is, additional to being a walking frame) or have been made or adapted to the specific illness or disability of a particular person.
Your product is a frame designed to be used for support by a person whose ability to walk is impaired. Your product assists a person with walking. Your product is designed to support a person while they are mobile.
Therefore, your product is a walking frame.
Your product does not have additional special characteristics or functions and is not made or adapted to the specific illness or disability of a particular person. Therefore, your product is not covered by item 100 in Schedule 3 to the GST Act.
Hence, your product is covered by item 98 and/or item 99 in Schedule 3 to the GST Act.
As your product is covered by one or more items in Schedule 3 to the GST Act, the requirement of paragraph 38-45(1)(a) of the GST Act is satisfied.
Your product is specifically designed for people with an illness or disability and would not be widely used by people without an illness or disability. Therefore, the requirements of paragraph 38-45(1)(b) of the GST Act are satisfied.
As your product satisfies the requirements of subsection 38-45(1) of the GST Act, you will make GST-free sales of the product.
Therefore, you will not make taxable supplies of the product. Hence, GST will not be payable on your sales of the product.