Edited version of your written advice

Authorisation Number: 1012975692123

Date of advice: 9 March 2016

Ruling

Subject: Medical aids and appliances

Question

Is your importation of the medical aid a non-taxable importation?

Answer

Yes. Your importation of the medical aid is a non-taxable importation.

Relevant facts and circumstances

You are registered for GST.

You are an importer and wholesaler of specialist ergonomic and health products.

You are importing and selling a medical aid that is designed and manufactured overseas.

The aid is ergonomically designed to provide relief to people with disabilities. It is endorsed by associations of medical professionals.

The medical aid has:

• adjustable or appropriately shaped/sized lumbar support,

• side supports,

• adjustable webbing under the seat,

• adjustable depth and height to some extent,

• adjustable seat base angle,

• adjustable calf support,

• footrests specifically designed for injured or disabled persons,

• wide seat,

• fitted with glides or wheels,

• fitted with locking brakes if fitted with wheels,

• arm rests that can be used as suitable handgrips for disabled people,

• specific features to enable people with difficulties in rising to get in and out of the seating, and

• pressure reducing cushions when fitted with visco-elastic cushions.

The aid is only available through specialist stores of ergonomic, health and wellness and rehabilitation products. These stores have staff members who are trained professionals in either ergonomic, physio or occupational therapy and who network closely with health professionals in their local markets.

You do not do direct consumer advertising apart from your websites and the other stores' websites. Health professionals become familiar with the specialist stores that you work with and recommend clients to the stores or may visit the stores with their clients to educate and make the clients aware of the products available to help them.

You are an approved private health fund product provider and are linked closely to various health practitioners who recommend your products.

You are importing particular models of the aid which are substantially the same. They only have minor differences in shape, arm length and control buttons.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5, and

A New Tax System (Goods and Services Tax) Act 1999 section 38-45.

Reasons for decision

Section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable importation if goods are imported; and 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.

According to section 13-10 of the GST Act, 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 it if had been a supply.

For the purpose of section 13-10 of the GST Act, we will determine first whether your importation of the medical aid is a non-taxable importation under paragraph (b).

Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free if:

(a) it is covered by an item in Schedule 3 or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations);

(b) the thing supplied is specifically designed for people with an illness or disability; and is not widely used by people without an illness or disability.

It should be emphasised that items which are GST-free under subsection 38-45(1) of the GST Act are GST-free at all points in the supply chain unless the supplier and the recipient agree that the supply not be treated as GST-free.

Covered by Schedule 3 or specified in the Regulations and is specifically designed for people with an illness or disability

Item 16 in Schedule 3 to the GST Regulations (item 16) lists postural support seating as specified medical aids and appliances for the purpose of paragraph 38-45(1)(a) of the GST Act.

To satisfy the description in item 16 and be considered to be specifically designed for people with an illness or disability, the postural support seating should be:

(a) custom made to suit the particular person's anatomical shape in order to provide correct postural support, or

(b) adjustable to such an extent that the product can be customised to the individual's body shape or size in order to provide correct postural support, or

(c) incorporate several of the following design characteristics which will ensure that the product provides the necessary postural support for people with an illness or disability:

• adjustable height to attain the correct seating position for the requirements of the individual

• adjustable back angle to enable proper support (other than simply reclining) and appropriately positioned/shaped back supports

• adjustable or appropriately shaped/sized lumbar support

• side supports

• adjustable seat height and depth

• adjustable seat base angle

• calf support

• adjustable shoulder and trunk supports

• footrests specifically designed for injured or disabled persons

• swing away arms or removable armrests

• wide arm rests

• integral push handles

• specifically designed to provide a correct sitting position that results in sitting firmly on the pelvic bones and that aligns and lifts the head, neck and back

• wheels, glides or mobile base suitable for movement of disabled people

• locking brakes

• suitable hand grips for disabled people

• specific features to enable people with difficulties in rising to get in and out of the seating

• pressure reducing cushions

Based on the information that you provided, several of the characteristics above are incorporated into the design of the medical aid. As such, the medical aid is covered by item 16.

Not widely used by people without an illness or disability

A medical aid and appliance is specifically designed for people with an illness or disability if it is created with the intention of having certain features or characteristics that would be of benefit to the people with an illness or disability.

In determining whether the products are 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 purpose for which the wider community purchases the product.

In this case, the medical aid is only available through specialist stores of ergonomic, health and wellness and rehabilitation products. These stores have staff members who are trained professionals in either ergonomic, physio or occupational therapy and who network closely with health professionals in their local markets. Furthermore, the medical aid is endorsed by associations of medical professionals. As such, we consider that the medical aid is not widely used by people without an illness or disability.

As the medical aid is covered by item 16 and is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability, the supply of the medical aid would be GST-free under subsection 38-45(1) of the GST Act. Therefore, your importation of the medical aid is a non-taxable importation as it would be a GST-free supply had it been a supply.

Additional information

The supply of things that are specifically designed as spare parts for the medical aid would be GST-free under subsection 38-45(1) of the GST Act. Thus, the importation of the spare parts would be a non-taxable importation.

The supply of accessories to the medical aid would not be GST-free under subsection 38-45(1) of the GST Act. Thus, the importation of the accessories would be a taxable importation unless the Department of Immigration and Border Protection (DIBP) determines that the importation is a non-taxable importation as the accessories are covered by particular items in Schedule 4 to the Customs Tariff Act 1995.