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Edited version of your written advice
Authorisation Number: 1051226431328
Date of advice: 23 May 2017
Ruling
Subject: GST and medical aids and appliances
Question 1
Is your supply of the product GST free under section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No. Your supply of the product is not GST free under section 38-45 of the GST Act.
Relevant facts and circumstances
● You operate a specialist audiology clinic testing and supplying patients with hearing aids.
● The product is a patch which when applied behind the ear may help to reduce the discomfort of tinnitus.
● The product is imported from overseas and you are a reseller of the product.
● The term 'tinnitus' is not defined in the GST Act. The Oxford Concise Medical Dictionary defines 'tinnitus' as:
the sensation of sounds in the ears, head, or around the head in the absence of an external sound source. It can occur with any form of hearing loss or with normal hearing. It is thought to be due to a misinterpretation of signals in the central auditory pathways of the brain. The signals that are misinterpreted can arise in any part of the auditory system: the cochlea, cochlear nerve, or within the brain itself. Treatment includes the correction of any underlying condition, counselling, cognitive behavioural therapy, relaxation techniques, sound therapy (see white noise instrument), and use of hearing aids. A unified method of treatment that makes use of all of these components is referred to as tinnitus retraining therapy.
● You consider the product is covered by Item 14 of Schedule 3 to the GST Act, Category Communication aids for people with disabilities, Medical aids and appliances, speech amplification/clarification aids (Item 14).
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
n Section 38-45
n Schedule 3 - Medical aids and appliances
A New Tax System (Goods and Services Tax) Regulations 1999:
n Schedule 3 - Medical aids and appliances
Reasons for decision
Medical aids and appliances you sell are GST-free if they meet all of the following three conditions:
● listed in schedule 3 to the GST Act or in schedule 3 to the GST regulations
● specifically designed for people with an illness or disability
● not widely used by people without an illness or a disability.
Relevantly Subsection GST Act 38-45(1)
(1) A supply is GST-free if:
a. It is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and
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.
The product is specifically designed for people with an illness or disability and not widely used by people without an illness or disability.
The product is not listed in schedule 3 to the GST Act or in schedule 3 to the GST regulations.
You consider the product is covered by Item 14 of Schedule 3 to the GST Act.
The product does not meet the definition of Item 14 of Schedule 3 to the GST Act as when discussing the GST treatment of sound amplifiers it is noted in:
ATO ID 2006/1: GST and sound amplifiers for people with hearing difficulties
Item 14 in the table in Schedule 3 to the GST Act (Item 14) lists 'speech amplification/clarification aids'. A speech amplification/clarification aid is a device that is designed to make a person's voice or sound appear larger and/or clearer and more intelligible.
Conclusion
The product is not listed under Schedule 3 to the GST Act or Schedule 3 to the GST Regulations.
The supply is not a spare part for another thing supplied which would be GST free under subsection 38-45(1).
The supply is not GST-free under subsection (1) or (2) if the supplier and the recipient have agreed that the supply not be treated as GST free supplies.
As your supplies of the product do not satisfy all the requirements of subsection 38-45(1) of the GST Act, they are not GST free under that provision.
Your supply of the product is neither GST free under any other provision of Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. You are registered for GST and where your supply of the product satisfies the other positive limbs of section 9-5 of the GST Act, that is, the supply is made for consideration, is made in the course of furtherance of an enterprise that you carry on and is connected with the Indirect Tax Zone, it will be a taxable supply and subject to GST.