Edited version of private advice

Authorisation Number: 1052238795429

Date of advice: 8 May 2024

Ruling

Subject: GST - supply of products

Question 1

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

Answer

No. Your supply of product 1 is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.

Question 2

Is your supply of product 1 to an NDIS plan manager GST-free under section 38-38 of the GST Act?

Answer

No. Your supply of product 1 to an NDIS plan manageris not GST-free under section 38-38 of the GST Act.

Relevant facts and circumstances

•         You are registered for goods and services tax (GST).

•         You sell a variety of product 1 (the products).

•         You sell the products online to consumers and/or direct from the store front at your warehouse location.

•         You do not deal with the NDIS participant directly. It is the plan manager who submits the purchase order for the supply of the products to the participant.

•         You do not have a written agreement with the NDIS participant or another person, that satisfies the requirements of paragraph 38-38(c) of the GST Act.

Relevant legislative provisions

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

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

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

Question 1

Is your supply of the products a GST-free supply of a medical aid or appliance under subsection 38-45(1)?

Summary

Your supply of the products is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) as the products are not covered by Schedule 3 (medical aids and appliances), or specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations).

Detailed reasoning

GST is payable when you make a taxable supply. Section 9-5 provides that you make a taxable supply if:

(a)          you make the supply for consideration; and

(b)          the supply is made in the course or furtherance of an enterprise that you carry on; and

(c)          the supply is connected with Australia; and

(d)          you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

For your supply of the products to be a taxable supply, all the requirements listed in section 9-5 must be satisfied.

In this case, you supply the products for consideration, the supply is made in the course of your enterprise, the supply is made in Australia, and you are registered for GST. Therefore, your supply of the products meets the requirements listed in paragraphs 9-5(a) to 9-5(d).

There are no provisions in the GST Act that will make your supply input taxed. As such, we have to consider whether or not your supply of the products is GST-free under Division 38.

GST-free medical aids and appliances

Section 38-45 outlines the circumstances in which the supply of certain medical aids and appliances will be GST-free.

Subsection 38-45(1) provides a supply is GST-free if (emphasis added):

(a)          it is covered by Schedule 3 (medical aids and appliances), or specified in the GST Regulations; and

(b)          the thing supplied is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability.

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

In this case, the products are not covered under any item in Schedule 3, nor do they fit into any category of medical aids specified in the GST Regulations. As such, your supply of the products does not satisfy the first limb under paragraph 38-45(1)(a). Where the first limb of subsection 38-45(1) is not satisfied, no further consideration will be required to be made in relation to the second and third limbs of subsection 38-45(1) (under paragraph 38-45(1)(b)). Therefore, your supply of the products is not a GST-free supply of a medical aid as it does not meet all the requirements under subsection 38-45(1).

Question 2

Is your supply of the products GST-free under section 38-38?

Summary

Your supply of the products is not GST-free under section 38-38 as it does not meet the requirements of this section.

Your supply of the products is a taxable supply under section 9-5.

Detailed reasoning

Section 38-38 outlines that certain disability supports provided to NDIS participants are GST-free if the supply (emphasis added):

(a) is a supply to a participant (within the meaning of the National Disability Insurance Scheme Act 2013) for whom a participant's plan is in effect under section 37 of that Act; and

(b) is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant's plan; and

(c) is made under a written agreement, between the supplier and the participant or another person, that:

(i) identifies the participant; and

(ii) states that the supply is a supply of one or more of the reasonable and necessary supports specified in the statement included, under subsection 33(2) of that Act, in the participant's plan; and

(d) is of a kind that the Disability Services Minister has determined in writing.

For a supply of disability support to be GST-free, all of the above requirements must be satisfied.

In your case, you do not deal with the NDIS participant directly, rather you deal with the plan manager who submits the purchase order for the products for the NDIS participant. In addition, you do not have a written agreement with the NDIS participant or another person that meets the requirements of paragraph 38-38(c). Accordingly, your supply of the products is not a GST-free supply of disability support under section 38-38. As your supply does not meet the requirements of paragraph 38-38(c), it is not necessary to consider whether the other requirements of section 38-38 are met.

Furthermore, your supply of the products is not GST-free under any other provision of the GST Act. Consequently, your supply of the products is a taxable supply as it satisfies all the requirements under section 9-5.