Edited version of your written advice

Authorisation Number: 1012662764469

Ruling

Subject: GST and medical aids and appliances

Question 1

Will the supply of a therapy device (device) be a GST-free supply of medical aids and appliances under section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supply of the device will not be a GST-free supply of medical aids and appliances under section 38-45 of the GST Act.

Question 2

Will the importation of the device be a non-taxable importation under Division 42 of the GST Act?

Answer

No, the importation of the device will not be a non-taxable importation under Division 42 of the GST Act.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You intend to import and distribute a medical aid product, therapy device (device), for people with disabilities.

The device has a battery operated actuator lift mechanism.

The device is a training device that simultaneously controls weight bearing, posture and balance over a treadmill or over ground.

It creates an ideal environment for treating patients with a wide range of impairments and functional levels.

The device provides proper posture, reduces weight bearing, eliminates concerns for balance and facilitates the training of coordinated lower extremity movement.

The unique device permits unilateral or bilateral support allowing progression, but also allows the clinician to manually assist the patient.

The device is designed to benefit therapists by preventing excessive forward lean, helping to chart patients' progress.

It is used across the country and around the world by therapists, parents and caregivers to improve the quality of rehab for patients in hospitals, outpatient clinics, schools, private practice clinic and homes.

The device can:

• facilitate proper gait pattern early in the rehabilitation process;

• work on symmetry and weight shifting;

• train coordination while controlling posture;

• manually assist in limb placement;

• measure weigh bearing; properly evaluate gait deficits;

• transfer coordination skills learned over a treadmill to over ground walking;

• train patients in the use of assistive devices;

• provide supported gait training to patients at all impairment levels;

• lift patients out of a wheelchair into an upright walking posture;

• work on sit to stand with more involved patients;

• provide supported gait training of ambulatory patients with various gait deficits and

• provide supported gait training for paediatric populations.

The device has five main features and is supplied to hospitals, rehab facilities and directly to patients with disabilities.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-10,

A New Tax System (Goods and Services Tax) Act 1999 section 38-45 and

A New Tax System (Goods and Services Tax) Act 1999 Division 42

A New Tax System (Goods and Services Tax) Regulation 1999 schedule 3 item 88

Reasons for decision

Question 1

Under subsection 38-45(1) of the GST Act, the supply of a medical aid or appliance is GST-free where the medical aid or appliance:

• is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), and

• is specifically designed for people with an illness or disability, and

• is not widely used by people without an illness or disability.

Item 88 in the table in Schedule 3 (Item 88) lists 'manual, electric, ceiling track or pool hoists specifically designed for people with disabilities'.

The ordinary meaning of 'hoist' as defined in The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd New South Wales is:

4. an apparatus for hoisting, as a lift.

5. a lift for heavy goods: goods lift.

The usual devices that are covered by Item 88 are used to lift an individual and transfer them, for example, from a bed to a wheelchair or from a wheelchair into a pool. The ordinary meaning of 'hoist' also covers lifts.

In this case, the device lifts a patient into position for walking therapy and precisely adjust load according to the patient's needs. It simultaneously controls weight bearing posture and balance over a treadmill or over ground and is designed for and marketed as a product for rehabilitation and not specifically use to lift an individual and transfer them.

The device also benefits facilities by helping to achieve an increase in the number of patients receiving gait therapy, reducing the risk of back injury to staff, treat extra patients etc.

Further, among other things, the device is designed to benefit therapists by preventing excessive forward lean and to help chart patient progress

As a result, the device is not specifically designed for people with an illness or disability.

Therefore, the device is not covered by item 88 in the table in Schedule 3 to the GST Act.

As the first and second requirements in subsection 38-45(1) of the GST Act are not satisfied, it is not necessary to consider the last requirement in that subsection.

Consequently, the supply of the device will not be a GST-free supply of medical aids and appliances under section 38-45 of the GST Act.

Question 2

Section 13-5 of the GST Act provides that an entity makes a taxable importation if it imports and enters goods for home consumption.

However, the importation is not a taxable importation to the extent that it is not a non-taxable importation.

Section 13-10 of the GST Act provides that an importation is a non-taxable importation if the importation is a non-taxable importation under Part 3-2; or would have been a supply that was GST-free or input taxed if it had been a supply.

In this case, the importation of the device will not be a non-taxable importation under Part 3-2 of the GST act; neither will it be GST-free or input-taxed when supplied.

Hence, GST will be payable on its importation.