Edited version of private advice

Authorisation Number: 1051913394669

Date of advice: 22 October 2021

Ruling

Subject: Goods and services tax and medical aids and appliances

Question

Is Product A 'medical aids and appliances' in accordance with subsection 38-45(1) of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore GST-free?

Answer

No, Product A is not 'medical aids and appliances' in accordance with subsection 38-45(1) of the GST Act and therefore is not GST-free.

The scheme commences on:

22 October 2021

Relevant facts and circumstances

This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Product A are adjustable reading glasses.

It consists of a complex arrangement of lenses that slide over each other to adjust the focus of the glasses.

It has dials located on the frame of the spectacles that the wearer can use to change the lens power.

Product A's website provides specific information about Product A.

Relevant legislative provisions

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

Reasons for decision

Under subsection 38-45(1) of 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 (Schedule 3), 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.

A medical aid or appliance can only be GST-free if it is listed in Schedule 3 to the GST Act or the GST regulations. The ATO cannot treat a medical aid or appliance as GST-free and cannot give a ruling that a medical aid or appliance is GST-free if it is not listed in Schedule 3 to the GST Act or the GST regulations.

Only the Australian Government, and not the ATO, can add new medical aids and appliances to Schedule 3 to the GST Act or the GST regulations.

Frames of Product A

The Health Industry Partnership - issues register, which is a public ruling representing the Commissioner's view, provides in Issue 4.a.14 as follows:

4.a.14. Are non-prescription sunglasses, frames for prescription lenses and accessories GST-free?

Non-interpretative - straight application of the law.

Non-prescription sunglasses, frames for prescription lenses and accessories are not listed in Schedule 3 and are not GST-free. Lenses for prescription spectacles are listed at Item 155 of Schedule 3 and are GST-free.

It is therefore the Commissioner's view that frames for prescription lenses are not GST-free.

There are no items in Schedule 3 of the GST Act or the GST Regulations that specifically list frames of adjustable reading glasses in one of its items. As such the frames of Product A will not meet the requirements of subsection 38-45(1) of the GST Act and therefore are not GST-free.

Lenses of Product A

Schedule 3 to the GST Act list the following items:

Item 153 - reading magnification devices (excluding magnifying glasses)

Item 155 - lenses for prescription spectacles.

There are no items in the GST regulations that deal with vision.

Item 153 - reading magnification devices (excluding magnifying glasses)

For the purposes of item 153 of Schedule 3 of the GST Act, a 'reading magnification device' is an appliance that is designed to specifically aid reading by increasing the size of written or printed visual symbols such as letters or words. For example, magnifying bar readers and page magnifiers are reading magnification devices.

These devices are specifically designed for people with visual impairment or vision loss. Visual impairment is a decreased ability to see to a degree that causes problems that are not fixable by the usual means such as glasses. For this reason, 'reading magnification device' excludes ready-made magnifying spectacles available from supermarkets and similar retail outlets.

You have told us that you purchased several of Product A for yourself and your parents and have referred us to the website XXX.com for further information on these spectacles.

Based on this information, it is apparent that Product A is a widely used general-purpose spectacles and do not fall within the meaning of Item 153 of Schedule 3 of the GST Act. As such Product A (both the frames and lenses) are not GST-free under item 153 of Schedule 3 of the GST Act.

Item 155 - lenses for prescription spectacles.

ATO Interpretative Decision ATO ID 2004/440 Goods and Services Tax: GST and the supply of prescription lenses for swimming goggle (ATO ID 2004/440) considers various aspect of prescription lenses. It states as follows:

The term 'prescription spectacles' is not defined in the GST Act. Where a term is not defined in the GST Act, it will take on its ordinary meaning unless the term has a special or technical meaning. Where a term has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that term relates ( Herbert Adams Pty Ltd v. Federal Commissioner of Taxation (1932) 47 CLR 222).

Given the context in which the term 'prescription spectacles' appears, the term is considered to have a special or technical meaning. Dorland's Medical Dictionary (2000) edition, Newman W. Dorland, WB Saunders, London, defines the word 'prescription' as a 'written direction for the preparation and administration of a remedy'. The word 'spectacles' is defined as 'a pair of lenses in a frame to assist vision'.

Accordingly, it is considered that 'prescription spectacles' are a pair of lenses in a frame provided in accordance with a prescription. Further, it is considered that the prescription must be made by an appropriately qualified person (eg an optometrist) for the purpose of remedying a sight defect (emphasis added).

Product A's website markets the spectacles as non-prescription reading glasses.

Given the above, Product A does not meet the requirement of 'prescription spectacles' as set out in ATO ID 2004/440 which requires the prescription to be a written direction that is made by an appropriately qualified person like an optometrist.

Therefore, Product A does not meet the requirements of Item 155 of Schedule 3 of the GST Act and as such are not GST-free under this item.