ATO ID 2003/1159: GST and importation of air purification system for installation in a motor vehicle
Date of decision: 7 July 2003
Business line: Indirect Tax

Issue
Is the entity, an importer of medical aids and appliances, 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 it imports an air purification system to be installed in a motor vehicle?

Decision
No, the entity is not making a non-taxable importation under paragraph 13-10(b) of the GST Act when it imports an air purification system to be installed in a motor vehicle. The entity is making a taxable importation under section 13-5 of the GST Act.

Facts
The entity is an importer of medical aids and appliances. The entity imports an air purification system. The air purification system has been manufactured without the use of synthetic chemicals and is to be installed into a motor vehicle for use by a person with chemical sensitivities. The entity is registered for goods and services tax (GST). The air purification system has been entered for home consumption within the meaning of the Customs Act 1901. The importation is not a non-taxable importation under Part 3-2 of the GST Act.

Reasons for decision
Summary: Section 13-5 of the GST Act 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) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed. Of relevance in this instance is subsection 38-45(1) of the GST Act, which provides that a supply of a medical aid or appliance is GST-free where the medical aid or appliance: Item 58 in the table in Schedule 3 (Item 58) lists 'motor vehicle modifications'. Item 58 refers to modifications made to a motor vehicle where: In the circumstances, provision of the air purification system is the provision of a part that is to be installed and does not involve the actual modification of the motor vehicle. That is, it does not form an integral part of a conversion process of a motor vehicle at the point in time that it is received. As such, an air purification system is not covered by Item 58. As the air purification system is not covered by Item 58, if there had been a supply to the entity (instead of an importation by the entity), the supply would not be GST-free under subsection 38-45(1) of the GST Act. As such, the entity is not making a non-taxable importation under paragraph 13-10(b) of the GST Act. The importation of the air purification system by the entity meets the positive limbs of section 13-5 of the GST Act. Furthermore, the importation is neither a non-taxable importation under Part 3-2 of the GST Act nor would it have been GST-free under any other provision of Division 38 of the GST Act or input taxed under Division 40 of the GST Act, had the importation been a supply. As such, the entity is making a taxable importation under section 13-5 of the GST Act when it imports an air purification system to be installed in a motor vehicle.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 13-5 paragraph 13-10(b) Division 38 Division 40 Part 3-2 subsection 38-45(1) Schedule 3 Schedule 3 table item 58
Other references: GST Pharmaceutical Health Forum - Issues Register - Attachment A Tax fact sheet NAT 4651
Subject references: Goods & services tax GST free GST health Section 38-45 - medical aids & appliances GST imports Taxable importations