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Edited version of your written advice
Authorisation Number: 1012757786624
Ruling
Subject: GST and Medical Aids and Appliances
Question
Is the supply of the specified hearing device to customers in Australia GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes.
Relevant facts and circumstances
You are an Australian entity. You are registered for GST.
You import and supply devices for deaf and hearing impaired people in Australia.
Amongst other products you supply a specified hearing device.
The device is designed for people with hearing aids to use their compatible mobile phone or music player together with a telecoil (t-coil) equipped hearing aid. The device transmits sound from the phone, directly to a hearing aid.
The device is specially made for people with hearing impairment, in particular those who are hearing aid wearers. The device cannot be used by anyone who does not wear a hearing aid.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Section 9-5
Section 38-45
Schedule 3: Item 14
Reasons for decision
Section 9-5 of the A New Tax System (Goods and Services Tax Act) 1999 (GST Act) 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).
The supply of the specified hearing device is not input taxed under any provision of the GST Act. What remains to be determined is whether or not the device is GST-free.
A supply of a medical aid or appliance will be GST-free if it satisfies the requirements of subsection 38-45(1) of the GST Act.
Subsection 38-45(1) of the GST Act provides that a supply of certain medical aids and appliances is GST-free if:
(a) it 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 (Regulations); and
(b) it is specifically designed for people with an illness or disability; and
(c) it is not widely used by people without an illness or disability
Schedule 3 of the GST Act includes a list of items relating to communication aids for people with disabilities. Item 14 of Schedule 3 (item 14) in this list specifies speech amplification/clarification aids. A speech amplification/clarification aid is a device designed to make sound appear larger and/or clearer and more intelligible.
The specified hearing device is designed to be used with hearing aids in order to aid the telephone communication of the hearing impaired. As the device is designed to make sound appear larger and clearer, it is a 'speech amplification/clarification aid' under item 14.
Further, you are supplying the devices specifically for people with a hearing impairment, particularly those who wear hearing aids. The device is not widely used by people without an illness or disability as it cannot be used without a hearing aid. As such, the specified hearing device satisfies all the requirements under subsection 38-45(1) of the GST Act.
Therefore the supply of the specified hearing device by you to customers in Australia is GST-free under subsection 38-45(1) of the GST Act.
Once an item meets all of the above elements then its supply will be GST-free all the way down the supply chain and not only when supplied to a person who has an illness or disability. One exception to this applies and that is when the supplier and the recipient agree to treat the supply as if it were taxable pursuant to subsection 38-45(3) of the GST Act, which states:
(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.