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Edited version of private advice
Authorisation Number: 1051520914424
Date of advice: 30 May 2019
Ruling
Subject: GST and medical aids and appliances
Question 1
Is your supply of the hearing aid device GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer 1
Yes, your supply of the hearing aid device to customers in Australia is GST-free under subsection 38-45(1) of the GST Act.
Question 2
Is your importation of the hearing aid device a non-taxable importation under section 13-10 of the GST Act?
Answer 2
Yes, your importation of the hearing aid device is a non-taxable importation under section 13-10 of the GST Act.
Relevant facts and circumstances
· You are registered for the goods and services tax (GST).
· You import the hearing aid device
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 13-10
A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1)
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 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 (Schedule 3) or in the table in Schedule 3 to the GST Regulations.
Item 43 in the table in Schedule 3 (Item 43) lists 'hearing aids'. Hearing aids are 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.
The hearing aid device is designed to assist those with hearing loss, it is a 'hearing aid' under Item 43 in the table in Schedule 3 to the GST Act.
Therefore, as the hearing aid device is covered by Item 43, 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. The hearing aid device is specifically designed as a tool to assist people living with hearing loss.
Based on the design and the marketing of the product we consider that the hearing aid 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. It is considered the hearing aid device is not widely used by people without a hearing loss.
As all the requirements in subsection 38-45(1) of the GST Act are satisfied, you are making a GST-free supply when you supply the hearing aid device.
Non-taxable importations
Subsection 13-5(1) 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 hearing aid device is GST-free under subsection 38-45(1) of the GST Act, your importation of the hearing aid device is a non-taxable importation under paragraph 13-10(b) of the GST Act.