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Edited version of your private ruling
Authorisation Number: 1012595202390
Ruling
Subject: GST medical aids and appliances
Question 1
Will GST be payable on your sales of medical aids and appliances.
Answer
No, GST will not be payable on your sales of medical aids and appliances
The medical aids and appliances are GST-free.
Relevant facts and circumstances
You are registered for GST.
You will sell the medical aids and appliances as distributor for an Australia company (the manufacturer).
The manufacturer will re-label the products with your brand for resale by you.
You stated that the products in question are specifically designed for people with an illness or disability, that is, each has a waterproof membrane that will stop staining and mites and bacteria from breeding. These products are used mainly by people who have the illness or disability or suffer from allergies.
You will not market the products on-line. You will sell the products to stores.
The manufacturer's warranty cards completed by private consumers who have purchased the products reveal that a majority of private consumers of these products have an illness or disability or allergies.
You will supply the products Australia wide.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-45
Reasons for decision
Medical aids and appliances
Section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that where the elements of that section are satisfied, a medical aid or appliance is GST-free. The elements of section 38-45 of the GST Act require that the medical aid or appliance be:
• covered by an item in Schedule 3 of the GST Act; and
• specifically designed for use by people with an illness or disability; and
• not widely used by people without an illness or disability.
On the basis of the information supplied the medical aids and appliances are specifically designed for use by people with an illness or disability and allergy / allergy-related conditions, and are not widely used by people without an illness or disability. These products are also covered by either Item 16 or Item 22 of Schedule 3 of the GST Act. Therefore supplies of the above named products are GST-free:
However, a supply is not GST-free if the supplier and the recipient have agreed that the supply or supplies of a kind that include that supply, not be treated as GST-free supplies (subsection 38-45(3) of the GST Act).
Four year limit and reimbursement of GST collected
Subsection 105-55(1) of Schedule 1 to the Tax Administration Act 1953 (TAA) provides a four-year time limit for entitlements to refunds or credits in relation to GST. The four-year period commences at the end of the tax period.
The four-year limit does not apply, if within that period an entity notifies the Commissioner that it is entitled to the refund or credit (paragraph 105-55(1)(a) of Schedule 1 to the TAA).
However, the Commissioner needs not give an entity a refund if the Commissioner is not satisfied that the entity has reimbursed a corresponding amount to the recipient of the supply or the recipient of the supply is registered or required to be registered for GST (105-65 (c) of the TAA Act).