Edited version of private advice

Authorisation Number: 1051668105109

Date of advice: 28 April 2020

Ruling

Subject: GST and medical aids and appliances

Question

Is the supply of the medical aid and appliance GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the medical aid and appliance is GST-free under subsection 38-45 (1) of the GST Act.

This ruling applies:

On and from the date of issue.

Relevant facts and circumstances

Entity is registered for goods and services tax (GST).

Entity supplies products.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 38-45(1)

New Tax System (Goods and Services Tax) Regulations 2019 section 38.45.01

Reasons for decision

Under subsection 38-45(1) of the GST Act, the sale of medical aids and appliance is GST-free if the medical aid or appliance is:

(a) 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.

Medical aid and appliances that satisfy all these condition are GST-free at every point in the supply chain - from manufacturer to consumer.

Schedule 3 to the GST Act list a range of items which may be GST-free medical aids or appliances, none of the items listed are relevant to your situation.

Item 9 in the table in Schedule 3 to the Regulations (Item 9) specifies 'postural support seating' which is relevant. Postural support seating as listed in Item 9 needs to be a specific type of seating possessing characteristics that satisfies both the description of the item and the use requirement of paragraph 38-45(1)(b) of the GST Act.

The phrase 'postural support seating' is not defined in the GST Act.

Generally, where a phrase is not defined in the relevant Act, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning. Where a phrase has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that phrase relates (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).

In order to satisfy the description in Item 9 and to be an item that is specifically designed for people with an illness or disability, 'postural support seating' should be:

(i) Custom made to suit the particular persons anatomical shape in order to provide correct postural support; or

(ii) Adjustable to such an extent that the product can be customised to the individual's body shape or size in order to provide correct postural support; or

(iii) Incorporate several of the following design characteristics which will ensure the product provides the necessary postural support for people with an illness or disability:

·         adjustable height so as to attain correct seating position for the requirements of the individual;

·         adjustable back angle to enable proper support (other than simply reclining) and contain appropriately positioned/shaped back supports;

·         adjustable seat height and depth;

·         adjustable seat base angle;

·         adjustable shoulder and trunk supports;

·         side supports;

·         calf support;

·         footrests specifically designed for injured or disabled persons;

·         swing away arms or removable armrests;

·         wide arm rests;

·         integral push handles;

·         specifically designed to provide a correct sitting position that results in sitting firmly on the pelvic bones and that aligns and lifts the head, neck and back;

·         fitted with wheels, glides or a mobile base suitable for movement of disabled people;

·         locking brakes;

·         suitable hand grips for disabled people;

·         specific features to enable people with difficulties in rising to get in and out of the seating; and

·         pressure reducing cushions.

The products cover several of the characteristics from point 3 above. As such the products fall within 'postural support seating' that is specifically designed for people with disability.

The product that does not have several of the above characteristics cannot be considered for GST-free treatment under subsection 38-45(1) as it doesn't fall under Item 9 above or any of the other items in Schedule 3 of the Regulations or the GST Act.

However, to be GST-free it needs to be established that the products are not widely used by people without an illness or disability.

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 common 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.

The marketing material for the product is an indicator of whether the product is directed at people with an illness or disability, or is directed at enhancing the lifestyle of people without an illness or disability.

On the facts of the case we consider that the products are not widely used by people without an illness and disability.

Therefore the products meet all of the requirements under section 38-45(1) of the GST Act and are considered to be GST-free.