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Edited version of private advice
Authorisation Number: 1051635116567
Date of advice: 24 October 2019
Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Question
Is the supply of products, GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No
The scheme commences on:
The date of issue of this private ruling.
Relevant facts and circumstances
You are registered for GST.
You design and manufacture a range of products.
You supplied a product listing for this private ruling.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 38-45
A New Tax System (Goods and Services Tax) Regulations 1999 regulation 38.45.01
Reasons for decision
The sale of medical aids and appliances is GST-free if they meet all three of the following conditions:
· listed in schedule 3 to the GST Actor in the GST regulations
· specifically designed for people with an illness or disability
· not widely used by people without an illness or a disability.
Medical aids and appliances that satisfy all these conditions are GST-free at every point in the supply chain - from manufacturer to consumer.
Item 9 of regulation 38.45.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) specifies 'postural support seating' as a medical aid or appliance for the category listed as 'Mobility of people with disabilities - physical: seating aids'.
Specifically designed
In determining whether a medical aid and appliance is specifically designed for people with an illness or disability, reference should be made to the designer's/manufacturer's intention of how the good is to be used and its features. Indicators of the designer's/manufacturer's intention of how a good is to be used include how the good is marketed and the type of retail outlets at which the goods can be purchased.
From the product information provided in the private ruling application and on your website, it is clear that the listed products are marketed and designed as office furniture.
Therefore, the products do not meet the requirement of being specifically designed for people with an illness or disability.
Not widely used
In determining whether a medical aid and appliance is used by people without an illness or disability reference should be made to how the wider community uses these goods. That is, the common purpose for which the goods are purchased.
Subsection 38-45(1) does not require the GST treatment of a medical aid and appliance to be determined by reference to the actual use for which an item is being purchased but rather focuses on the purpose for which the wider community purchases these products.
Accordingly, it is considered that irregular and uncommon use of a medical aid and appliance in a way contrary to its manufactured purpose will not prevent the good from being GST-free.
Your products are designed and marketed to meet the growing demands of the working environment so it would be anticipated that the bulk of your orders come from office-based businesses.
Therefore, the products will be widely used by people without an illness or a disability.
The products will not be GST-free under subsection 38-45(1) of the GST Act.