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Edited version of your written advice
Authorisation Number: 1051428437766
Date of advice: 11 December 2018
Ruling
Subject: GST status of your medical aids or appliances
Questions
1. Are your supplies of the first medical aid or appliance GST-free?
2. Are your importations of the first medical aid or appliance non-taxable importations?
3. Are your supplies of the second medical aid or appliance GST-free?
4. Are your importations of the second medical aid or appliance non-taxable importations?
Answers
1. Yes, your supplies of the first medical aid or appliance are GST-free supplies under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
2. Yes, your importations of the first medical aid or appliance are non-taxable importations under paragraph 13-10(b) of the GST Act.
3. Yes, your supplies of the second medical aid or appliance are GST-free supplies under subsection 38-45(1) of the GST Act.
4. Yes, your importations of the second medical aid or appliance are non-taxable importations under paragraph 13-10(b) of the GST Act.
Relevant facts and circumstances
You are registered for the goods and services tax (GST).
You import and sell two types of medical aids or appliances.
Both types of medical aids or appliances have been specifically designed for people with an illness or disability.
Neither medical aid or appliance is widely used by people without an illness or disability.
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 Section 13-10
A New Tax System (Goods and Services Tax) Act 1999 Paragraph 13-10(b)
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 3, Item 144
Reasons for decision
GST-free supplies
Under subsection 38-45(1) of the GST Act, the supply of a medical aid or 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 satisfied for a medical aid or appliance to be GST-free. A medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act will be GST-free all the way down the supply chain and not only when supplied to a person with an illness or disability.
The first requirement in subsection 38-45(1) of the GST Act is that the medical aid or appliance must be listed in the table in Schedule 3 to the GST Act or in the table in Schedule 3 to the GST Regulations.
The medical aids or appliances you import and supply are listed in Schedule 3 to the GST Act.
We consider that the two products you import and supply meet the first requirement in subsection 38-45(1) of the GST Act by being a medical aid or appliance listed in the table in Schedule 3 to the GST Act.
The second requirement in subsection 38-45(1) of the GST Act is that the medical aid or appliance must be specifically designed for people with an illness or disability. In determining whether a medical aid or appliance is specifically designed for people with an illness or disability, reference should be made to the manufacturer's intention of how the product is to be used and its features. Indicators of the manufacturer's intention of how a product is to be used include how the product is marketed and the type of retail outlets at which they are purchased.
We consider that the two products you import and supply are specifically designed for people with an illness or disability and meet the second requirement in subsection 38-45(1) of the GST Act.
The third requirement in subsection 38-45(1) of the GST Act is that the thing is not widely used by people without an illness or disability. In determining whether a medical aid or appliance is widely used by people without an illness or disability, reference should be made on how the wider community uses the relevant product. That is, the common purpose for which the product is purchased. It is not the actual use for which a product is purchased that is important but the purpose for which the wider community purchases the product.
Based on the information provided we consider that the two products you import and supply would not be purchased and widely used by people without an illness or disability.
We consider that as the two products you import and supply are not widely used by people without an illness or disability, they meet the third requirement in subsection 38-45(1) of the GST Act.
As all the requirements in subsection 38-45(1) of the GST Act are satisfied, you are making GST-free supplies under subsection 38-45(1) of the GST Act when you supply the medical aids or appliances.
Non-taxable importations
Section 13-5 of the GST Act provides that the importation of goods into Australia is subject to GST if they are entered for home consumption within the meaning of the Customs Act 1901. However, an importation is not subject to GST to the extent it is a non-taxable importation.
Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed.
As your supplies of the medical aids or appliances are GST-free under subsection 38-45(1) of the GST Act, the importations of the medical aids or appliances are non-taxable importations under paragraph 13-10(b) of the GST Act.