ATO ID 2004/630: GST and supply of an implantable drug pump
Date of decision: 21 August 2002
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 an implantable drug pump?

Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies an implantable drug pump as it is covered by item 13 in the table in Schedule 3 to the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

Facts
The entity is a supplier of medical aids and appliances. The entity supplies an implantable drug pump. The implantable drug pump is supplied to hospitals and is used to treat patients with chronic pain through the continuous delivery of medication, at a set rate, into the intrathecal space (the area surrounding the spinal cord). The implantable drug pump is surgically placed under the skin of the abdomen to deliver the medication to a specific site in the body through an infusion set that includes a surgically placed catheter. The implantable drug pump is specifically designed for people with an illness or disability and not widely used by people without an illness or disability. There is no agreement between the entity and the recipient 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 a medical aid or appliance is GST-free where the medical aid or appliance: Item 13 in the table in Schedule 3 to the GST Regulations (Item 13) lists 'infusion pumps'. An infusion pump is a pump that is used in association with an infusion set to deliver a measured dose of medication. The implantable drug pump is used to treat patients with chronic pain through the continuous delivery of medication, at a set rate, into the intrathecal space (the area surrounding the spinal cord). The implantable drug pump is surgically placed under the skin of the abdomen to deliver the medication to a specific site in the body through an infusion set that includes a surgically placed catheter. As such, the implantable drug pump is an infusion pump that is covered by Item 13. In addition, the implantable drug pump is specifically designed for people with an illness or disability and not widely used by people without an illness or disability. Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies an implantable drug pump.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1) Schedule 3
Other references: Commonwealth of Australia 2004. GST Pharmaceutical Health Forum - Issues Register - Attachment B - Schedule 3 - Medical aid or appliance (Regulation 38-45.01). Tax Office, viewed 21 May 2004, www.ato.gov.au
Subject references: Goods and services tax GST free GST health Section 38-45 - medical aids & appliances