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Edited version of your written advice
Authorisation Number: 1012775656805
Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Question 1
Is GST payable on your sale of the defibrillators/monitors?
Answer
No.
Question 2
Is GST payable on your importation of the defibrillators/monitors?
Answer
No.
This ruling applies for the following periods:
This ruling applies indefinitely (subject to the limitations set out in the fact sheet that accompanied the ruling).
Relevant facts and circumstances
You are registered for GST.
You import into Australia and sell products that provide ECG monitoring & vital signs monitoring as well as standard defibrillation function. They are used for emergency response and also for hospitals and medical professionals. The products can be used as AEDs.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 subsection 13-5(1)
A New Tax System (Goods and Services Tax) Act 1999 section 13-10
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1)
Reasons for decisions
Question 1
Summary
Your sales of the products are GST-free because the products are heart monitors.
Detailed reasoning
GST is payable on taxable supplies.
You make a taxable supply if you meet the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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.
(*Denotes a term that is defined in section 195-1 of the GST Act)
A sale of a medical device is GST-free if the requirements of subsection 38-45(1) of the GST Act are met.
Subsection 38-45(1) of the GST Act states:
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 it is not widely used by people without an illness or disability.
Item 1 in the table in Schedule 3 to the GST Act (item 1) is heart monitors.
There is no item in the table in Schedule 3 to the GST Act or Schedule 3 to the GST Regulations for defibrillators.
The products in question are AEDs.
An AED is a single device that performs more than one function. Where a single device performs more than one function it is necessary to determine what is its primary or most important function. The primary function of an AED is to monitor the patient's heartbeat or rhythm for the purpose of deciding whether a defibrillating shock is required. The device will either instruct the user to press a button or it will automatically activate, to deliver the shock to the patient.
An AED is a machine that is used primarily to monitor the heartbeat of patients in emergency situations with the ability to deliver a defibrillating shock if necessary. Therefore, it is considered to be covered by item 1. Additionally, an AED is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability.
As all of the requirements of subsection 38-45(1) of the GST Act are met, your sales of the products in question are GST-free under subsection 38-45(1) of the GST Act.
Therefore, your sales of the products are not taxable supplies. Hence, GST is not payable on these sales.
(Note that a sale of a machine which has the sole function of defibrillation is not GST-free because defibrillators are not listed in Schedule 3 to the GST Act or Schedule 3 to the GST Regulations).
Question 2
Summary
GST is not payable on the importation of the products because they are heart monitors.
Detailed reasoning
GST is payable on taxable importations.
Subsection 13-5(1) of the GST Act states:
You make a taxable importation if:
(a) goods are imported; and
(b) you enter the goods for home consumption (within the meaning of the Customs Act 1901).
However, the importation is not a taxable importation to the extent that it is a non-taxable importation.
Section 13-10 of the GST Act states:
An importation is a non-taxable importation if:
(a) it is a non-taxable importation under Part 3-2; or
(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.
In your case, the products in question are imported and you enter them for home consumption. Therefore, you meet the requirements of paragraph 13-5(1)(a) and 13-5(1)(b) of the GST Act.
As the sale of these products is GST-free, the importation of these products are non-taxable importations by virtue paragraph 13-10(b) of the GST Act. Therefore, the importations of these products are not taxable importations. Hence, GST is not payable on the importation of these products.
Specify exemption code B1 on the import declaration form.