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Edited version of your written advice
Authorisation Number: 1012897923243
Date of advice: 20 October 2015
Ruling
Subject: GST and advanced wound care products
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 supply Product X?
Answer
Yes, you are making a GST-free supply under subsection 38-45(1) of the GST Act when you supply Product X for the following reason:
Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances 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)
• is specifically designed for people with an illness or disability, and
• is not widely used by people without an illness or disability.
Item 2 in the table in Schedule 3 to the GST Regulations (Item 2) lists hydro colloids. The GST Pharmaceutical Health Forum - Issues Register - Attachment B - Schedule 3 - Medical aids or appliances describes hydro colloids as an advanced wound care product predominantly consisting of hydro colloids.
As Product X is predominantly made up of hydro colloid it is considered as an advanced wound care product under item 2 of Schedule 3 to the GST Regulations. As such, Product X satisfies the first requirement under subsection 38-45(1) of the GST Act.
Product X is for use on burns and wounds. Product X may also be used in open wounds and superficial bedsores. Product X is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability. Therefore, the remaining requirements in subsection 38-45(1) of the GST Act are met and the supply of the Product X is GST-free.
Relevant facts and circumstances
You market and distribute your own range of medical products. You also hold licenses in products from other companies.
You sponsor Product X under licence from an overseas based manufacturer.
Product X is predominantly made up of hydro colloid.
Product X is for use on burns and wounds. Product X may also be used in open wounds and superficial bedsores.
Product X is currently marketed in Xg tubes to pharmaceutical wholesalers.
Product X is regulated by the Australian Therapeutic Goods Administration as a Hydrogel dressing (ARTG 145421).
Relevant legislative provisions
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
A New Tax System (Goods and Services Tax) Regulations 1999 Schedule 3 table, item 2