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Edited version of private advice
Authorisation Number: 1012625278715
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 an ultrasonic aroma diffuser?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You sell a product called an ultrasonic diffuser. The product is an electric aromatherapy diffuser / humidifier / ioniser / air purifier and mini night lamp. This product works on ultrasonic vibration and produces a cold vapour that is water based. It is primarily used with essential oils.
The ultrasonic diffuser while multi-functional is primarily used for aromatherapy.
An ultrasonic diffuser differs from electric and candle burners that disperse essential oils in a room through heating the oil. Ultrasonic vibrations vibrate the water at 1.7 million times per second to produce a fine vapour rather than heating the water. As the water is dispersed into the atmosphere the ultrasonic diffuser can also be considered an air purifier, ioniser and humidifier.
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:
v 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)
v specifically designed for people with an illness or disability, and
v 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 any item relevant to the ultrasonic diffuser.
Item 132 in Schedule 3 of the GST Act lists 'vaporisers'. This is the only item of relevance to the ultrasonic diffuser.
The term 'vaporisers' 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 28th edition defines 'vaporizer' as
1. An apparatus for reducing medicated liquids to a state of vapour suitable for inhalation or application to accessible mucous membranes.
2. A device for volatizing liquid anaesthetics.
This definition indicates that the primary purpose of a vaporiser is to facilitate the delivery of liquid medications.
The primary purpose of the ultrasonic diffuser is to disperse essential oils in a room. It is not used for reducing liquid medication to vapour, and is therefore not captured within the technical meaning of a vaporiser for the purposes of the GST Act.
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 an ultrasonic diffuser is not a GST-free supply.