Edited version of your written advice

Authorisation Number: 1012805459698

Ruling

Subject: GST and medical aids and appliances

Question

Are you making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you sell the bidet toilet seats and bidet toilet attachments to the customers in Australia?

Answer

No you are not making a GST-free supply. You are making a taxable supply under section 9-5 of the GST Act when you sell the bidet toilet seats and bidet toilet attachments to the customers in Australia.

Relevant facts and circumstances

• You are an entity and you are registered for the goods and service tax (GST).

• You conduct a business that imports, promotes and sells bidet toilet seats and bidet toilet attachments.

• Information on these products is available on your website.

• You sell the above specified products to customers in Australia only.

• The products are designed to aid in the cleaning process after going to the toilet.

• The products contain a number of functions which are designed for the comfort of the user, whether or not the user has a disability or illness.

Product information

• The bidet attachment is designed with the comfort of the user in mind. It is beneficial to health, hygiene and general wellbeing. It is a luxury item that one can have for the sake of one's personal hygiene.

• Although each model is different, they all have one thing in common: superior cleansing abilities. The use of the bidet products can mitigate the onset of various health issues. It helps achieve excellence in daily hygiene for the whole family.

• The top reasons why one should use the bidet products include:

• More hygienic; more environmentally friendly than paper; save on toilet paper

• Helps with health problems e.g. constipation or haemorrhoids

• People who suffer from haemorrhoids no longer have to suffer with the rough abrasive feel of toilet paper.

• Help develop great personal hygiene habits

• Anyone can use a bidet toilet seat. It is of particular benefit to people with disabilities or special needs and to those who are finding it increasingly difficult to remain independent.

• Bidet toilet seats work well for those who have a limited range of motion, making it easier for them to clean themselves and making it easier for their carers.

• The products are personal hygiene appliances manufactured for household use, aid independent living and special needs and are easily removed if required.

• Many of the customers purchase these products to assist with medical conditions and/or disabilities. The products are used by disabled, frail, and aged people. They give users dignity by allowing them to take care of their own personal hygiene without assistance from other people.

• Other customers purchase these products simply as an alternative cleaning method. The products are used by people who opt for a healthier more hygienic alternative to cleaning after going to the toilet.

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 38-45(1);

A New Tax System (Goods and Services Tax) Act 1999 Schedule 3; and

A New Tax System (Goods and Services Tax) Regulations 1999 Regulation 38-45.01.

Reasons for decision

Under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), the supply of a medical aid and appliance is GST-free where the medical aid and 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.

All the above three requirements of subsection 38-45(1) of the GST Act must be satisfied for the supply to be GST-free. 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.

Item 51 in the table in Schedule 3 to the GST Act lists 'bidet/bidet toilet attachments'.

Item 111 in the table in Schedule 3 to the GST Act lists 'bathboards or toilet seats for people with disabilities'.

We consider that the specified bidet toilet seats and bidet toilet attachments in this case are bidet toilet attachments that are covered by Item 51 in Schedule 3 to the GST Act.

Specifically designed for people with an illness or disability and not widely used by people without an illness or disability

Whether an item is specifically designed for people with an illness or disability and whether an item is widely used by people without an illness or disability is a question of fact.

The specified bidet toilet seats and bidet toilet attachments are used by the disabled, frail, and aged people as well as the public at large. It needs to be determined first, whether these bidet products are specifically designed for people with an illness or disability.

Specifically designed for people with an illness or disability

In deciding this matter, the ATO considers that medical aids and appliances which are capable of being used by aged persons can satisfy the requirement that the medical aid or appliance be specifically designed for people with an illness or disability and not be widely used by people without an illness or disability. However, this consideration by itself is not sufficient to decide whether the bidet products in question are specifically designed for people with an illness or disability.

In determining whether medical aids and appliances are specifically designed for people with an illness or disability, reference should be made to the designer's/manufacturer's intention of how the goods are to be used and their features. Indicators of the designer's/manufacturer's intention of how the goods are to be used include how the goods are marketed and the type of retail outlets at which the goods can be purchased.

The information provided on the bidet products and their manufactured purpose does not suggest that they are specifically designed for people with an illness or disability.

The bidet products, which, with their many features, are manufactured for household use, may be convenient for aged people and people with illnesses or disabilities because these people are more prone to have difficulty reaching private parts of their body causing health and personal hygiene problems. Bidet toilet seats may work well for those who are handicapped and have a limited range of motion, making it easier for them to clean themselves and making it easier for their carers.

However, for the purpose of section 38-45(1) of the GST Act the products are not specifically designed for this category of people. Therefore, we consider that the bidet toilet seats and bidet toilet attachments that you sell, are not specifically designed for people with an illness or disability. As such, one of the three requirements for the supply of a medical aid and appliance to be GST-free under section 38-45(1) of the GST Act is not satisfied.

Not widely used by people without an illness or disability

In determining whether a medical aid and appliance is used by people without an illness or disability reference should be made to how the wider community uses these goods. That is, the common purpose for which the goods are purchased.

Subsection 38-45(1) of the GST Act does not require the GST treatment of a medical aid and appliance to be determined by reference to the actual use for which an item is being purchased but rather focuses on the common purpose for which the wider community purchases these products.

While the manufacturer's website promotes the bidet product as a health product it also promotes it for use other than for health and medical purposes, one of them being that it is a personal hygiene appliance and a luxury item that you can have for the sake of your personal hygiene.

While the bidet toilet seats and bidet toilet attachments are promoted by the manufacturer as providing particular benefits to people with disabilities or special needs and to those who find it increasingly difficult to remain independent, they can be used and are used by the public at large as an everyday personal hygiene appliance.

Consequently, when you supply the bidet toilet seats and bidet toilet attachments to customers in Australia, you are not making a GST-free supply under subsection 38-45(1) of the GST Act as all the requirements of this subsection are not satisfied.

The supply of the products satisfies the requirements of a taxable supply under section 9-5 of the GST Act as:

• you make the supply for consideration

• the supply is made in the course of an enterprise that you carry on

• the supply is made in Australia

• you are registered for GST, and

• the supply in your circumstances is neither GST-free nor input taxed under any provisions of the GST Act.

As such, the supply of the bidet toilet seats and bidet toilet attachments will be a taxable supply and will subject to GST and it does not matter whether the products are supplied to a person with or without a disability.