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Edited version of your written advice
Authorisation Number: 1013096511895
Date of advice: 23 September 2016
Ruling
Subject: GST and sale of 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 supply the specified product?
Answer
No, you are not making a GST-free supply under subsection 38-45(1) of the GST Act when you supply the product. You are making a taxable supply under section 9-5 of the GST Act.
Relevant facts and circumstances
• You carry on a business and you are registered for goods and services tax (GST).
• You sell the specified product which moulds to the patient to keep the patient still during medical treatment.
• The product is designed and manufactured solely for use in the specific therapy.
• The devices are only designed to keep a patient stable during treatment.
• Your customers are hospitals in Australia.
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
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 or appliance:
• is covered by Schedule 3 to the GST Act, 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.
All the above requirements must be met for the supply of a medical aid and appliance to be GST-free.
Your product is not specifically listed and is not considered to be of a kind listed in any item in the table in Schedule 3 to the GST Act (Schedule 3) or specified in the GST Regulations.
As your product is not covered by any item listed in the table in Schedule 3 or specified in the GST Regulations, you are not making a GST-free supply under subsection 38-45(1) of the GST Act when you sell the specified product. This is regardless of whether the product is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability. There are no other provisions in the GST Act that make your supply GST-free.
Section 9-5 of the GST Act provides that you make a taxable supply if:
• you make the supply for consideration; and
• the supply is made in the course or furtherance of an enterprise that you carry on; and
• the supply is connected with the indirect tax zone (that is, Australia); and
• you are registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
There are no provisions in the GST Act that make your supply input taxed. In your case, you will satisfy all the requirements under section 9-5 of the GST Act when you sell your product.
Consequently, you will be making a taxable supply when you sell your specified product. GST is payable on taxable supplies.
Note: Only Parliament - and not the ATO - can add new medical aids and appliances to Schedule 3 to the GST Act or schedule 3 to the GST Regulations.