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Edited version of your written advice
Authorisation Number: 1013015440975
Date of advice: 16 May 2016
Ruling
Subject: GST and named product
Question 1
Is a supply of a named product GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, supply of a named product is GST-free.
Relevant facts and circumstances
You are registered for GST.
You supply medical services and associated goods.
Your product is manufactured in Australia.
You will supply your product to other health professionals and will also recommend and supply, as a registered health practitioner to patients.
Your product is supplied through medical health professionals and may also be available through pharmacies, rehabilitation providers and other related outlets.
Most of the sales are expected to come from professional recommendation.
Your product is a medical aid. It is used by an individual while in either a seated or reclined position. It is only suitable as an aid under the buttocks.
Your product is used to prevent or alleviate various disorders that may cause sitting pain.
Your product may also relieve lower back pain, encourage better sitting posture and assist some conditions associated with impaired neurological developments.
Your product will not be used widely by persons without an illness or disability. There is little if any demand for the product apart from assisting those people who experience symptoms associated with sitting.
Your product:
• Relieves pressure in the lower spine, improves sitting posture & prevents deep back muscles from tensing.
• Maintains the natural curvature of the back as it encourages more upright posture.
• Enhances core strength and improves your body coordination.
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 Medical aids and appliances
Reasons for decision
Under section 9-5 of the GST Act, you make a taxable supply if:
a) you make a supply for consideration; and
b) the supply is made in the course or furtherance of an enterprise that you carry on
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.
There is nothing in the GST Act that would make the supply of a medical aid input taxed.
Subsection 38-45(1) of the GST Act provides that a supply of medical aids and appliances is GST-free:
• if it is covered by Schedule 3 (medical aids and appliances) or specified in regulations; and
• the thing supplied is specifically designed for people with an illness or disability, and
• is not widely used by people without and illness or disability.
For the supply of your product to be GST-free all of the requirements of subsection 38-45(1) of the GST Act must be met.
Item 87 of Schedule 3 (Item 87) lists 'cushions specifically designed for people with disabilities'. The phrase 'X specifically designed for people with disabilities' is not defined in the GST Act.
Generally, where a word or phrase is not defined, it is usually interpreted in accordance with its ordinary meaning unless it has a special or technical meaning. Where a word or phrase has a special or technical meaning, it is necessary to determine the meaning by reference to the industry to which that word or phrase relates (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).
For the purposes of Item 87, the ordinary meaning of the phrase 'X specifically designed for people with disabilities' is interpreted to mean medical aids with a specific designed character or function that have been made, or adapted, for the purposes of:
• assisting with the support, or positioning, of an individual with a disability; or
• preventing or alleviating conditions associated with that disability.
The product is a medical aid that has been manufactured from a special polyurethane coated nylon outer.
The product has been designed to assist individuals in preventing or alleviating various disorders that may cause sitting pain.
The product is specifically designed for people who may experience the above mentioned illness or disability, and there would be little or no demand by people who are not experiencing symptoms associated with sitting. Therefore, the product is not widely used by people without an illness or disability.
It is considered that the product falls within the meaning of 'X specifically designed for people with disabilities' for the purposes of Item 87.
Therefore the supply of your product is a GST-free supply under subsection 38-45(1) of the GST Act.