Edited version of your written advice

Authorisation Number: 1051503627211

Date of advice: 12 April 2019

Ruling

Subject: GST and a medical device

Question 1

Is your supply of the medical device GST-free?

Answer 1

Yes, your supply of the medical device is a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Question 2

Is your importation of the medical device a non-taxable importation?

Answer 2

Yes, your importation of the medical device is a non-taxable importation 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 a medical device.

● Customers will be able to purchase a medical device separately, or as part of a kit.

Relevant legislative provisions

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 section 38-45

A New Tax System (Goods and Services Tax) Act 1999 Section 182-15

A New Tax System (Goods and Services Tax) Act 1999 subsection 182-10(2)

Reasons for decision

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 2019 (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.

Item 33 in the table in Schedule 3 to the GST Act (Item 33) lists ‘medical alert devices’. A medical alert device is a device which is designed for the purpose of alerting medical/caring personnel or an ambulance that a person is in need of emergency medical assistance or that person has a medical condition that may require specific treatment.

The medical device is covered by Item 33 in the table in Schedule 3 to the GST Act, and the first requirement in subsection 38-45(1) of the GST Act is met.

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.

The medical device was specifically designed as a tool to assist people living with an illness or disability. Based on the design and manufacturers intention in the development of the medical device and the marketing of the product we consider that the medical device is specifically designed for people with an illness or disability and meets 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 to 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.

You have advised that although the medical device could be used for other purposes, this is not likely or common. The specific features of the medical device render it unlikely to be purchased and used for broader purposes. Based on this information we consider that the medical device would not be widely purchased and used by people without an illness or disability, and therefore it will 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 a GST-free supply under subsection 38-45(1) of the GST Act when you supply the medical device.

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 supply of the medical device is GST-free under subsection 38-45(1) of the GST Act, your importation of the medical device is a non-taxable importation under paragraph 13-10(b) of the GST Act.