ATO ID 2003/1102: GST and hydro gel based advanced burn treatment products
Date of decision: 18 June 2003
Business line: Indirect Tax

Issue
Is the entity, a supplier of medical aids and appliances, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a hydro gel based advanced burn treatment product?

Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a hydro gel based advanced burn treatment product.

Facts
The entity is a supplier of medical aids and appliances. The entity supplies hydro gel based burn treatment products such as: Hydro gels are preparations whose bases usually consist of water, glycerol (glycerine) or propylene glycol gelled with suitable gelling agents such as tragacanth, starch, cellulose derivatives, carboxyvinyl polymers and magnesium-aluminium silicates. Hydro gels provide optimal circumstances for wound healing. The entity's products are used primarily to treat burns and are specifically designed for burns victims. The products are not widely used by people without an illness or disability. There is no agreement between the entity and the recipient of the supply that the supply will not be treated as a GST-free supply. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance: Paragraph (c) of item 1 in subsection 38-45.01(1) of the GST Regulations (paragraph (c) item 1) lists 'hydro gel'. The entity's products, hydro gel soaked dressings and blankets, consist primarily of hydro gel and fall within paragraph (c) item 1. As such, these products satisfy the first requirement under subsection 38-45(1) of the GST Act. The entity's products are used primarily to treat burns and are specifically designed for burns victims. The products are not widely used by people without an illness or disability. Therefore, the remaining requirements in subsection 38-45(1) of the GST Act are met. The entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a hydro gel based advanced burn treatment product.

Legislative references: A New Tax System (Goods and Services Tax) Regulations 2019 subsection 38-45.01(1) table item 1 paragraph (c)
Subject references: Goods and services tax GST free GST health Section 38-45 - medical aids & appliances