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Edited version of your written advice
Authorisation Number: 1012792210554
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Ruling
Subject: GST: Medical Aids and Appliances
Question 1
Is GST payable on the supply of a device which assists the blind and vision impaired (the medical aid) (where you do not supply installation or removal services)?
Answer
No, GST is not payable on the supply of the medical aid.
Question 2
Is GST payable on the supply and installation services (and removal if required) of the medical aid?
Answer
No, GST is not payable on the supply and installation (and removal if required) of the medical aid.
Relevant facts and circumstances
• The Taxpayer is registered for GST.
• The taxpayer carries on an enterprise in Australia for the supply and installation of a medical aid specifically designed to assist the blind and vision impaired.
• The Taxpayer makes the following two types of supplies:
- The supply of the medical aids only to third parties,
- The supply of the medical aids, and the installation service.
• The invoices issued by the taxpayer for the supply and installation of medical aids states that they are GST-free as per section 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
• There is no agreement with customers of the medical aids not to treat the sales as GST-free supplies.
• The Taxpayers' medical aids are an Australian made product which conforms to the relevant Australian safety standards.
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 Section 38-45
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(3)
Reasons for decision
GST is payable on taxable supplies.
You make a taxable supply where you satisfy the requirements of 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.
(* is a defined term under section 195-1 of the GST Act)
From the information received, the supply of the medical aids and appliances (medical aids), by the taxpayer (where the taxpayer does not supply any installation services), satisfies paragraphs
9-5(a) to 9-5(d) of the GST Act as:
(a) the taxpayer receives consideration for their supply; and
(b) the supply is made in the course of the taxpayers enterprise; and
(c) the supply is connected with Australia
(d) the taxpayer is registered for GST.
There are no provisions in the GST Act or any other Act under which these supplies are input taxed. Therefore, what remains to be determined is whether the taxpayer is making GST-free supplies.
Division 38 of the GST Act sets out the supplies that are GST-free. Relevantly, section 38-45 of the GST Act outlines the circumstances in which the supply of certain medical aids will be GST-free. The medical aid comes with Item 151 in the table in Schedule 3 of the GST Act which lists auditory/tactile alerting device. The supply of the medical aid also satisfies the other requirements of section 38-45 and as such is GST-free.
Question 2
When the taxpayer supplies and installs medical aids in Australia, what needs to be determined is whether the installation services form part of a GST-free supply under the GST Act
Paragraph 4.a.13 of the Health Industry Partnership - issues register (HIP issues register) considers whether the installation of a GST-free medical aid forms part of a composite GST-free supply of the medical aid.
One of the scenarios in paragraph 4.a.13 of the HIP issues register is where an entity supplies and installs a complete device (being a medical aid or appliance listed in Schedule 3 to the GST Act), under a single contract, by attaching it to a building or fixture or to other property/goods. Where the attachment of the complete device in such cases is necessary for the aid or appliance to be able to be used for the function for which it is designed, there is a composite GST-free supply of a medical aid.
The dominant part of this composite supply is the supply of the medical aid. The installation service is integral, ancillary or incidental to the supply of the medical aid, as the installation service merely contributes to or complements the use or enjoyment of this dominant part of the composite supply.
In the taxpayer's case, the taxpayer may be contracted to supply and install a complete device, being a medical aid listed in Schedule 3 to the GST Act, that is, under a single contract. The taxpayer's installation of the medical aid involves the taxpayer attaching them to a building, and such attachment is necessary for the medical aid to be able to be used for the function for which they are designed, that is, to allow blind or vision impaired people to navigate through the built environment and to warn them of potentially dangerous situations.
Therefore, in accordance with paragraph 4.a.13 of the HIP issues register, the supply and installation of the medical device, under a single contract will be GST-free.
Removal and repair services
We are of the view that the removal of worn/damaged medical aids, where the removal is part of a single supply which includes the supply and installation of the medical aid is also GST-free.
However, the removal of the medical aids, without replacing them, will be outside the scope of subsection 38-45(1) of the GST Act as it does not involve the supply of a GST-free medical aid. A removal service does not satisfy the requirements of subsection 38-45(1) and therefore will not be GST-free.