| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051330512610
Date of advice: 14 February 2018
Ruling
Subject: GST and medical device
Question
Is the supply of the Device GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No.
The supply of the Device is a taxable supply under section 9-5 of the GST Act.
Relevant facts and circumstances
You are planning to launch the Device in Australia soon.
You are registered for GST.
The Device uses a patented technology to stimulate the body’s healing mechanism and gain pain relief. It can be used for a range of injuries and conditions including for chronic or ongoing pain and everyday aches.
You referred us to the manufacturer’s website which contains pictures and product information.
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 paragraph 38-45(1)(a).
A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-45(1)(b).
A New Tax System (Goods and Services Tax) Act 1999 section 182-15.
A New Tax System (Goods and Services Tax) Act 1999 Schedule 3 table item 109.
Reasons for decisions
Summary
The supply of the Device is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Detailed reasoning
Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance:
● 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) (paragraph 38-45(1)(a) of the GST Act and
● is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability (paragraph 38-45(1)(b) of the GST Act).
Although the Device may be specifically designed for people with an illness or disability and not widely used by people without an illness or disability, the supply of the Device is not GST-free unless it is covered by Schedule 3 or specified in the GST Regulations.
You submit that the Device is a 'pain relief delivery system’ of a kind listed in item 109 of Schedule 3 (item 109).
Item 109 lists syringe drivers under the category heading 'pain relief delivery systems’. You should note that the category heading is not an operative part of Schedule 3 (section 182-15 of the GST Act and Note 2 in Schedule 3). As such, the category heading may only be used as an interpretation tool in certain circumstances, for example, where the description of an item listed in Schedule 3 is ambiguous or obscure (paragraph 182-10(2)(c) of the GST Act).
A syringe driver is a device which automatically administers the contents of a syringe (containing pain relieving or other medication), by slowly depressing the plunger of the syringe.
The meaning of the term ‘syringe drivers ' is clear. Therefore, the interpretation of ‘syringe drivers’ is not restricted by its category heading.
The Device uses different energy sources to eliminate pain. Although the Device is used for pain relief, it is not a syringe driver of the kind listed in item 109 because it does not administer medications over selected time period.
There are no other items in either Schedule 3 or in the GST Regulations that may cover the Device. Accordingly, the supply of the Device does not satisfy the requirements of subsection 38-45(1) of the GST Act.
The supply of the Device is a taxable supply if the requirements of section 9-5 of the GST Act are satisfied.
Section 9-5 of the GST Act provides that you make a taxable supply if:
(a) you make the supply for consideration
(b) the supply is made in the course or furtherance of an enterprise that you carry on
(c) the supply is connected with the indirect tax zone and
(d) 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.
The supply of the Device satisfies the requirements in paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act as follows:
● the supply of the Device is for consideration,
● the supply is made in the course or furtherance of your enterprise,
● the sale is connected with the indirect tax zone and
● you are registered for GST.
The supply of the Device is not GST-free under section 38-45 of the GST Act or under any other provision of the GST Act or of another Act. In addition, the supply of the Device is not input taxed. Therefore, as all the requirements of section 9-5 of the GST Act are satisfied, the supply of the Device is a taxable supply.