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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012641612035

Ruling

Subject: Medical aids

Question 1

Is a product that is used to collect and transport medical samples a medical aid that is GST-free?

Answer

No.

Relevant facts and circumstances

The product is a medical collection facilitator. The product is fitted on to toilet seats. People who need to provide a sample to a doctor for medical testing will use the toilet in the normal manner. The medical aid extracts a portion of the sample into a specimen container.

The remaining unused sample is let to slide down into the water after the sample is extracted and the product is removed from the toilet seat which is then discarded in the trash.

The product is non-flushable.

The sample which is extracted and sealed in a specimen contained will be returned to the doctor for examination/testing.

The product has already been confirmed as a Class 1 product by the Therapeutic Goods Administration.

The product is only intended to be used to collect a specified samples for medical testing purposes.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 7-1

Section 9-5

Section 38-45

Reasons for decision

Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies. Taxable supplies are defined in 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.

(terms marked with asterisks (*) are defined in section 195-1 of the GST Act)

Division 38 of the GST Act covers GST-free supplies. Section 38-45, relevantly, states:

    (1) 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.

    (2) A supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designed as a spare part for, another thing the supply of which would be GST-free under subsection (1).

    (3) However, a supply is not GST-free under subsection (1) or (2) 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.

Schedule 3 (medical aids and appliances) lists the medical aids or appliances that are GST-free where the other requirements under section 38-45 of the GST Act are satisfied. The items contained in Schedule 3 are separated into 27 categories. The issue here is determining whether the product falls under Item 15 of Schedule 3 which states:

    Item Category Medical aids or appliances

…

15 Continence urine/faecal drainage/collection devices

Item 15 refers to items that are used to control or to assist in the management of urine or faecal incontinence. We are of the view that urine continence involves the loss of control of the bladder, leading to involuntary passing of urine and that faecal incontinence involves the loss of control of the bowel, leading to involuntary passing of stool.

We are of the view that the product is not designed to assist in the management of a continence issue. The product merely assists and facilitates the collection of samples for the purposes of medical testing.

While the people using the device may be suffering some sort of illness (including incontinence) (and hence, the need for samples for medical testing), the device does not, in our view come within item 15 of a faecal drainage/collection device. Accordingly, the product is not listed in Schedule 3.

The also product does not come within any of the items in Schedule 3 of GST Regulations or any other GST-free provision of the GST Act.

As the product does not meet the requirement of paragraph 38-45(1)(a) of the GST Act, it is not a GST-free supply.


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