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Edited version of private advice
Authorisation Number: 1012623511482
Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Question
Are you making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 when you supply the product?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You sell a product commonly viewed as a medical garment.
The product is widely used in hospitals and nursing homes.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 38-45,
A New Tax System (Goods and Services Tax) Act 1999 Schedule 3 and
A New Tax System (Goods and Services Tax) Regulations 1999 Schedule 3.
Reasons for decision
The supply of a medical aid or appliance is GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if it is:
• listed in Schedule 3 to the GST Act or in Schedule 3 to the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)
• specifically designed for people with an illness or disability, and
• not widely used by people without an illness or a disability.
An item will only be GST-free if it meets all three requirements of subsection 38-45(1) of the GST Act.
The first requirement is that the thing supplied must be covered by an item listed in the table in Schedule 3 to the GST Act or Schedule 3 to the GST Regulations.
Currently, Schedule 3 of the GST Regulations does not list the product.
Item 69 in Schedule 3 of the GST Act (Item 69) lists 'lower limb orthoses'. This is the only item of relevance to the product.
The term 'lower limb orthoses' is not defined in the GST Act and as the term appears in a list of medical aids and appliances it is appropriate to consider its definition in a medical dictionary.
Stedman's Medical Dictionary (2000) defines 'orthoses' as 'an external orthopaedic appliance, as a brace or splint, that prevents or assists movement of the spine or the limbs'. Lower limb is defined to mean 'the hip, thigh, leg, ankle or foot'.
Further guidance on what is a 'lower limb orthoses' is provided in the GST Pharmaceutical Health Forum - issues register - attachment A - schedule 3 - medical aid or appliance, which states:
A device designed to be applied to the body to change or alter position or motion, or prevent movement, of the hip, thigh, leg, ankle or foot for the treatment of an illness or disability to that hip etc.
An example of a medical aid that is a 'lower limb orthoses' is a leg brace, which attaches to the upper and lower leg and provides resistance to movements of the knee joint.
The product is not a device designed to prevent or assist movement of the hip and is therefore not a 'lower limb orthoses' and is not covered under Item 69.
As the first requirement of subsection 38-45(1) of the GST Act is not met, it is not necessary to consider the remaining requirements.
The supply of the product is not a GST-free supply.