Edited version of private advice

Authorisation Number: 1051960881562

Date of advice: 17 May 2022

Ruling

Subject: GST and electronically operated beds

Question

Is your supply of the following electronically operated adjustable beds GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 ('GST Act')?

(a) Model 1;

(b) Model 2;

(c) Model 3; and

(d) Model 4

Answer

(a) No, your supply of Model 1 is not GST-free under subsection 38-45(1) of the GST Act. The supply of the bed is a taxable supply;

(b) No, your supply of Model 2 is not GST-free under subsection 38-45(1) of the GST Act. The supply of the bed is a taxable supply;

(c) No, your supply of Model 3 is not GST-free under subsection 38-45(1) of the GST Act. The supply of the bed is a taxable supply; and

(d) Yes, your supply of the Model 4 is GST-free under subsection 38-45(1) of the GST Act.

This ruling applies from:

XX XXXX 20XX to XX XXXX 20XX

Relevant facts and circumstances

You are registered for GST

You import and sell electronically operated adjustable beds in Australia

You do not currently have any agreement with your customers or suppliers to treat the supply of your products as a GST-free supply.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (Cth) section 9-5

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

Reasons for decision

Electronically operated adjustable beds

Subsection 38-45(1) sets out three elements, all of which must be satisfied before a supply of a medical aid or appliance can be considered GST-free. These are the supply must be:

•                listed in the table in Schedule 3 to the GST Act (Schedule 3) or in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations);

•                specifically designed for people with an illness or disability; and

•                not widely used by people without an illness or disability.

Covered by an item in Schedule 3

Schedule 3 provides a list of GST-free medical aid and appliances. Item 60 lists 'electronically operated adjustable beds'.

Paragraph 4 of GSTD 2021/2states:

4. Adjustable beds are covered by either table item 59 (manually operated) or table item 60 (electronically operated) of Schedule 3. A bed is covered by one of these table items if its upper and lower sections can be adjusted or manipulated to assist a person who has limited mobility to get in and out unaided, or to allow a person to rest with their upper or lower body elevated.

You advised that Model 1, Model 2, Model 3, and Model 4 are operated electronically via a wireless remote control, allowing for the upper and lower sections of the base to be adjusted by the user.

Based on the information provided, we consider your supply of electronically operated adjustable beds to be covered by Item 60.

Specifically designed for people with an illness or disability, and not widely used by people without an illness or disability

Factors considered in determining whether a medical aid or appliance is specifically designed for people with an illness or disability, and not widely used by people without an illness or disability are outlined in GSTD 2021/2. Paragraphs 7 to 10 states:

Specifically designed

7. The following factors are a non-exhaustive list of matters you should take into account when considering whether a particular product is specifically designed for people with an illness or disability:

•                An objective view of the design features and characteristics of the product indicate whether its essential character is that it is specifically designed for people with an illness or disability.

•                The designer's or manufacturer's intention of how the particular product is to be used. Indicators of the designer's or manufacturer's intention include an objective consideration of how the product is marketed and the type of outlets at which the product can be purchased.

Not widely used

8. The phrase 'not widely used' is not defined in the GST Act. It therefore takes its ordinary meaning, having regard to the context in which it appears.^[4] It is a question of degree whether a product is not widely used by people without an illness or disability. The Commissioner considers that it is reasonable to conclude that the test is not satisfied if the product is widely purchased by or on behalf of people without an illness or disability, without the need to examine how this class of people in fact use the product.

9. In the context of paragraph 38-45(1)(b), the Commissioner considers 'not widely used' to mean not used by many people who do not have an illness or disability.

10. The following factors will be relevant, but are not an exhaustive list, when considering whether a product is widely used by people without an illness or disability:

•                The product is widely sold in retail or other outlets that predominantly sell standard beds (that is, beds that do not have features specifically designed for people with an illness or disability) to the general public.

•                The marketing material for the product emphasises how it enhances the lifestyle of people without an illness or disability.

Model 1 and Model 3

Model 1 and Model 3 do not satisfy the requirements under subsection 38-45(1). Therefore, your supply of Model 1 and Model 3 is a taxable supply subject to GST.

Model 2

Although Model 2 may be specifically designed for people with an illness or disability, the manner in which it is marketed and where it is made available for purchase demonstrates that the product is widely used by people without an illness or disability. Therefore, Model 2 is not GST-free as it does not satisfy subsection 38-45(1). Therefore, your supply of Model 2 is a taxable supply and subject to GST.

Model 4

Model 4 satisfies the requirements under subsection 38-45(1). Therefore, your supply of Model 4 is GST-free.