Edited version of your written advice

Authorisation Number: 1013135817785

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Date of advice: 2 December 2016

Ruling

Subject: GST and a supply of the products

Issue 1

Is GST payable on your supply of the products to Australian customers in Australia under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

Yes, your supply of the products to Australian customers in Australia is a taxable supply and subject to GST.

Issue 2

Is GST payable on the importation of the products by you in Australia under section 13-5 of the GST Act?

Answer 2

Yes, your importation of the products is a taxable importation and subject to GST.

Relevant facts

● You are an Australian company which is registered for GST.

● You import and supply range of products.

● The products are purchased by health conscious people, parents testing children, driving responsibly, concerned individuals, caregivers or clinicians.

● Some of the products are used in the workplace to ensure that employees are safe to be working.

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 13-5

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)

A New Tax System (Goods and Services Tax) Act 1999 Section 38-50

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

A New Tax System (Goods and Services Tax) Regulations 1999

Reasons for decision

Issue 1

Taxable supply

GST is payable on a taxable supply. A supply is a taxable supply under section 9-5 of the GST Act if:

(a) the supplier makes the supply for consideration; and

(b) the supply is made in the course of an enterprise that the supplies carries on; and

(c) the supply is connected with the indirect tax zone (Australia); and

(d) the supplier is registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

You must satisfy all of the above for their supply to be a taxable supply and to be liable for GST.

From the information given you satisfy paragraphs 9-5(a) to (d) of the GST Act when you supply the products as:

a) you make your supply for consideration;

b) you make the supply of the products in the course of an enterprise that you carry on in Australia;

c) your supply is connected with Australia as you are carrying on your enterprise in Australia; and

d) you are registered for GST.

However, your supply of the products is not a taxable supply to the extent that it is GST-free or input taxed.

The supply of the products to customers in Australia is not input taxed under any provisions of the GST Act or any other legislation.

The next step is to determine whether the supply of the products by you is GST-free.

GST-free

Under subsection 38-45(1) of the GST Act, a supply of a medical aid or appliance is GST-free if:

● it 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)

● it is specifically designed for people with an illness or disability, and

● it is not widely used by people without an illness or disability.

Schedule 3 to the GST Act and the GST Regulations contain a list of medical aids and appliances which are generally used by people with various illnesses or disabilities. However, Schedule 3 to the GST Act and the GST Regulations do not operate in isolation to make the listed items GST-free. The supply of any item listed in Schedule 3 to the GST Act or the GST Regulations as medical aids or appliances must also satisfy all of the requirements in subsection 38-45(1) of the GST Act in order for that supply to be GST-free, i.e. the medical aid or appliance must be specifically designed for people with an illness or disability and must not be widely used by people without an illness or disability.

Additionally, subsection 38-45(3) of the GST Act states that a supply of a medical aid or appliance is not GST-free if the supplier and the recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as a GST-free supply.

Item 137 breathing monitors

Item 137 in the table in Schedule 3 to the GST Regulations (Item 109) lists breathing monitors. The health industry considers a 'breathing monitor' to be a device with the primary purpose of measuring a patient's breathing in circumstances where such monitoring is essential (for example, the patient is unconscious or under an anaesthetic).

Based on the information provided, we consider that the products are not 'breathing monitors' as they are not used to monitor breathing situations where the patient is unconscious or under an anaesthetic. Therefore the products are not GST-free under item 137.

Furthermore, based on the information, the products are commonly used by people for the aim of it being an accurate and reliable device intended to help people. Further, the products are available to purchase for the general public online. Therefore, we consider that the products are not specially designed for people with disabilities or illness even though they may be used by people with a disability or illness due to the fact they are also available to the wider public for general use. Hence, your supply of the products will not meet the requirement under subsection 38-45(1) of the GST Act.

The products are not covered by any other items in Schedule 3 or the Regulations. Hence, your supply of the products is not GST-free under subsection 38-45(1) of the GST Act.

Furthermore, the supply of the products is not GST-free under any other provisions of the GST Act or any other Act.

Therefore, as all of the requirements of section 9-5 of the GST Act are satisfied, your supply of the products is a taxable supply under section 9-5 of the GST Act. Hence, GST is payable on your supply of the products.

Issue 2

Under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a taxable importation if:

(a) goods are imported, and

(b) 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.

Goods and Services Tax Ruling GSTR 2003/15 provides guidance on the operation of the provisions in the GST Act which apply to the importation of goods into Australia. (GSTR 2003/15 is available at the Australian Taxation Office website at www.ato.gov.au).

Goods are typically imported into Australia when they are brought to Australia to be unloaded or landed here. 'Imported' in this context has its ordinary meaning.

If you lodge an import entry in your name as the 'owner' of the goods, you enter the goods for home consumption within the meaning of the Customs Act; and you are liable to pay GST on that importation if the importation is a taxable importation.

From the facts provided, you satisfy the requirements of the taxable importation under paragraphs 13-5(a) and 13-5(b) of the GST Act as follows:

(a) you import the products into Australia for your own use, and

(b) you enter the products for home consumption when completing the customs formalities.

As the products will be imported and entered for home consumption, the importation of the products is a taxable importation unless the circumstances of the importation make it a non-taxable importation.

Non-taxable importation

Under section 13-10 of the GST Act, an importation is a non-taxable importation if: 

● it is a non-taxable importation under Part 3-2 of the GST Act, or

● it would have been a supply that was GST-free or input taxed if it had been a supply.

As discussed in the reasons for decision to issue 1, the supply of the products is not GST-free or input taxed under any provisions of the GST Act or any other legislation.

Furthermore, the importation of products into Australia is not a non-taxable importation under Division 42 of the GST Act (which complements several of the existing concessional items in Schedule 4 to the Customs Tariff Act 1995 (Cth)).

Accordingly, the importation of the products is not non-taxable importations and therefore, the importation of the products is taxable importations. Hence, GST is payable on the importation of the products.