Edited version of your written advice

Authorisation Number: 1051463517556

Date of advice: 20 December 2018

Ruling

Subject: GST and medical aids and appliances

Question

Are the products in question supplied by you GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the products in question supplied by you are GST-free under subsection 38-45(1) of the GST Act.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You are a company supplying medical products in several different categories.

You provided description and features of some products that you sell which are extracted from the manufacturer’s website.

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 Schedule 3

Reasons for decision

All legislative references are made to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise stated.

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

(a) is covered by Schedule 3 to the GST Act or 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.

Item 1 of Schedule 3 (Item 1) lists ‘heart monitors’ as a medical aid and appliance for the purposes of paragraph 38-45(1)(a).

The term ‘heart monitors’ is not defined in the GST Act, thus takes on its ordinary meaning unless the term has a special or technical meaning. Where a term has a special meaning, it is necessary to determine its meaning by reference to the industry to which that term relates.

The Stedman’s Medical Dictionary (2000) defines a cardiac (heart) monitor to mean: ‘an electronic monitor which, when connected to the patient, signals each heartbeat with a flashing light, an electrocardiographic curve, an audible signal, or all three.’

As such, it is considered that a device with the primary function of monitoring a patient's heartbeat is a 'heart monitor' and is covered by Item 1 of Schedule 3.

The device is a device where its primary function is to monitor the patient’s heartbeat or rhythm in emergency situations, for the purpose of deciding whether a defibrillating shock is required. The device will either instruct the user to press a button or it will automatically activate to deliver the shock to the patient.

The device is an electronic monitor device where its primary function is to monitor a patient’s heart in hospital, GP clinic or physician’s room.

The device is where its primary function is to monitor a patient’s heart while under stress. It also signals heart beat with an electrocardiographic curve.

In summary, all the products listed in the facts above are primarily used to monitor a patient’s heart beat and signals each heart beat with an electrocardiographic curve. The products are therefore considered to be ‘heart monitor’ covered by item 1 of Schedule 3. The requirement in paragraph 38-45(1)(a) is satisfied. It is also considered that as these products are specifically designed for people with an illness or disability and not widely used by people without an illness or disability they will satisfy subsection 38-45(1).

As such, the products in question are GST-free supplies of medical aids and appliances as:

● the primary function of all the products is to monitor a person’s heart and signals heart beat with an electrocardiographic curve, and

● the products are specifically designed for people with an illness or disability and is not widely used by people without an illness or disability, and

● you have not entered into agreement with recipient of the products in question for the products not be treated as GST-free supplies.