Edited version of private advice

Authorisation Number: 1052237594822

Date of advice: 16 April 2024

Ruling

Subject: GST - medical aids and appliances

Question

Are you making a non-taxable importation under paragraph 13-10(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when you make an importation of various related products?

Answer

No, you are not making a non-taxable importation under paragraph 13-10(b) of the GST Act when you make an importation of various related products. You are making taxable importations under section 13-5 of the GST Act because they are not GST-free medical aids and appliances under subsection 38-45(1) of the GST Act.

This ruling applies for the following period:

16 April 2024 to 16 April 2028

Relevant facts and circumstances

You intend to import various related products for resale in Australia.

You provided website of your supplier with whom you are purchasing the products.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

A New Tax System (Goods and Services Tax) Act 1999 section 13-10

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

A New Tax System (Goods and Services Tax) Act 1999 Schedule 3

A New Tax System (Goods and Services Tax) Regulations 2019 section 38-45.01

Reasons for decision

Detailed reasoning

All legislative references in this ruling are to GST Act, unless otherwise stated.

Section 13-5 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 if it is a non-taxable importation.

Under paragraph 13-10(b), an importation is a non-taxable importation if the thing imported would have been GST-free or input taxed if it had been supplied within Australia. Therefore, it needs to be determined whether the products would have been GST-free or input taxed, if they had been a supply made within Australia.

There is no provision in the GST Act that will make the supply of the various products input taxed if they had been a supply made within Australia. As such, we have to consider whether or not it is GST-free under Division 38.

Subsection 38-45(1) provides that a 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), and

•         is specifically designed for people with an illness or disability, and

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

For the supply of a medical aid or appliance to be a GST-free, all the above requirements must be satisfied.

Item 41 in Schedule 3 is the only relevant item that could apply to the supply of the products where it lists 'surgical shoes, boots, braces and irons'.

The phrase 'surgical shoes, boots, braces and irons' is not defined in the GST Act. Therefore, it will be given their ordinary meaning. ATO Interpretative Decision ATOID 2002/80 Goods and Services Tax: GST and the importation of footwear designed to be fitted with an orthotic states that the Macquarie Dictionary (2015) defines 'surgical' as 'relating to or involving surgery' and surgical boot as 'a specially constructed boot or shoe designed to support or correct a deformed foot'.

The term 'surgical' is seen to apply to each of the terms in Item 41. The Macquarie Dictionary (2015) defines 'surgical' as 'relating to or involving surgery' and the item as 'something that holds parts together or in place, as a clasp or clamp'.

In your case, your supplier's website advertised the use of products instead of surgery as a non-surgical treatment option. It also advised that the medical treatment with the use of their product is a gentle alternative to avoid surgical interventions.

In this regard, since the use of the products is an alternative to surgery, it is not utilised as a result of surgery to support or hold together the body part. As such, it does not meet the definition of 'surgical' and is not covered by item 41 of Schedule 3. Further, the products do not fit into any other category of medical aids in Regulation 38-45.01 of the GST Regulations. As the supply of products does not satisfy the first limb of subsection 38-45(1), no further consideration is required to be made in relation to the second and third limbs of subsection 38-45(1). Therefore, it is determined that the supply of the products is not a supply of GST-free medical aids and appliances as it does not meet the requirements under subsection 38-45(1).

Consequently, when you import the various related products, you are not making a non-taxable importation under paragraph 13-10(b). Instead, you are making a taxable importation of the products under section 13-5 because they are not GST-free medical aids and appliances under subsection 38-45(1).