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Edited version of your written advice
Authorisation Number: 1051422606269
Date of advice: 29 August 2018
Ruling
Subject: GST status of a supply of a medical aid
The supply of a particular medical related device is GST free as the statutory requirements under subsection 38-45(1) are met.
Question
Is a supply of the medical related device GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes a supply of the medical related device is GST- free under section 38-45 of the GST Act.
This ruling applies for the following periods:
1 January 2018 onwards
The scheme commences on:
1 January 2018
Relevant facts and circumstances
● You are the exclusive importer and distributor of the medical related device the subject of this ruling.
● You work with related medical communities and people by assisting them in improving their accessibility with the general community.
● Your goods or services are provided to either the end user or organisations and associations that support the end user. These organisations also support medically impaired people.
● The medical related device is marketed through your website, to health professionals and previous clients.
● The medical related device can be purchased through health professionals, government clinics and at your showroom and through your website.
● The medical related device can be used in conjunction with a medical aid, but also in place of a medical aid. In some medical aid fittings, the medical aid device can be cumbersome to install or operate for disabled or elderly clients. The medical related device is quick to fit, and easy to operate, improving medical comprehension for people with this medical condition, but would prefer not to use medical aids.
● You stated that the medical related device is similar to previous products that were ruled as GST free supplies.
● The medical related device is used to enhance various individual abilities. It combines the features of previous models into one device.
● The medical related device can be used with a mobile device by pairing it via a Bluetooth connection.
● It is rechargeable and connects with relevant attachments.
● The purpose of the medical related device is the amplification and clarification of speech for those affected. It will be purchased by the end user as an alternative to the standard medical aid, or to enhance the sound through medical aids with the addition of an attachment.
● The medical related device is specially designed for related medical persons to enhance their engagement in conversation and the community.
● The medical related device is specifically designed for people with an illness or disability as it is a medical aid which reduces the sound noise ratio in difficult situations where people struggle to maintain their lifestyle with minimal impact from their disability.
● The medical related device consists of various receivers, and is battery operated.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999, subsection 38-45(1)
Reasons for decision
Under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) the supply of certain medical aids and appliances is GST-free where the medical aid or appliance:
(a) 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); and
(b) is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.
Once an item meets all of the above requirements then its supply is GST-free all the way down the supply chain and not only when supplied to a person who has an illness or disability.
Paragraph 38-45(1)(a) of the GST Act
The first subparagraph to be satisfied for an item to be GST-free under subsection 38-45(1) of the GST Act is that the medical related device must be covered under Schedule 3 or specified in the GST Regulations.
Item 43 in the table in Schedule 3 to the GST Act (item 43) specifies 'medical aids' as medical aids and appliances.
The term 'medical aids' is not defined in the GST Act. The ‘GST Pharmaceutical Health Forum - Issues Register - Medical aid or appliance’ describes 'medical aids' as an electronic amplifying device consisting of a microphone, amplifier and receiver which is designed to bring sound into the ear. Generally these devices are battery operated.
Based on the information provided, it is considered that the medical related device satisfies the description of a 'medical aids' because it is an electronic amplifying device that consists of multiple receivers. The charging unit is designed to be used with the receiver unit; as such its supply is treated as a supply of one thing.
The medical related device can be used in conjunction with a medical aid or alone (in place of a medical aid) to obtain better speech clarity or volume in noisier situations. As the medical related device provides clarity by removing the acoustic interference and amplifies the sound both when coupled with other medical aids or standalone. The device is also capable of doing this when paired with a mobile telephone or with a streaming device.
As the medical related device is designed to enable the medical-impaired person to better engage when they need to, without the limitation of distance and the noise and distraction of other background noise, it is considered that Item 43 applies in this case.
The requirement in subparagraph 38-45(1)(a) of the GST Act is satisfied.
Paragraph 38-45(1)(b) of the GST Act
This subparagraph of the GST Act has two limbs:
● It must be designed for a person with an illness or disability and
● The product cannot be widely used by people without a disability.
The medical related device is designed and manufactured to benefit a person with a medical impairment and is not widely used by people without an illness or disability based on the information you have provided.
In particular, the medical related device is only of limited availability through health professionals and previous customers. The device is designed to be used with medical aids and can be used with a variety of options – as outlined. These features confirm that the medical related device has been designed with the medical impaired in mind. Given this limited availability and specific design, the device is not widely used by people without illness or disability.
The requirements in paragraph 38-45(1)(b) of the GST Act are satisfied and the supply of the medical related device is GST- free.