Private ruling: GST and specialised bras
Published: January 2015

Ruling: Q1: Is the supply by you of the post specialised bras to an Australian customer GST-free pursuant to subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the supply by you of the post specialised bras to an Australian customer is GST-free pursuant to subsection 38-45(1) of the GST Act.

Relevant facts and circumstances: You are an Australian business which specialises in specialised bras (products) for women who had breast surgery. You are registered for GST. All the bras are exactly the same in design with a pocket inside the cups to securely and comfortably fit breast prosthesis. . The products will be sold through your online store. The products will be marketed using traditional media and new methods such as social media. The products will be described as specialised bras. The retail price of the products will be priced slightly higher than the normal/general purpose bras because of the extra workmanship required to include the pockets and also the extra research and testing of the products to ensure they meet the outcomes they are designed to do, that is, you test to ensure the cups securely and comfortably fit the breast prosthesis for a woman who had a surgery.

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 38-45 | A New Tax System (Goods and Services Tax) Act 1999, Section 195-1

Reasons for decision: Summary: The post-surgery bras (products) are considered to be 'supplements and aids associated with mammary prostheses' as listed in item 15 of the Schedule 3 to A New Tax System (Goods and Services Tax) Regulations 199 9 (GST regulations), satisfying the requirement in paragraph 38-45(1)(a) of the GST Act is satisfied. In addition, the products are 'specifically designed for people with an illness or disability', and are 'not widely used by people without an illness or disability', satisfying paragraph 38-45(1)(b) of the GST Act. Therefore the supply of the products is GST-free. | Detailed Reasoning - Detailed reasoning: Section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 ( GST Act) deals with medical aids and appliances. It provides that for a supply to be GST-free it must: • be covered by Schedule 3 to the GST Act, or specified in the GST regulations; • be specifically designed for people with an illness or disability; and • not be widely used by people without an illness or disability. | Detailed Reasoning - Specified in the GST regulations: Schedule 3 to the GST regulations consists of a table of medical aids and appliances. Item 15 of schedule 3 lists 'supplements and aids associated with mammary prostheses'. ATO Interpretative Decision (ATO ID) 2001/472 states as follows: Generally, where a word or phrase is not defined, it is usually interpreted in accordance with its ordinary meaning unless it has a special or technical meaning. Where a word or phrase has a special or technical meaning, it is necessary to determine the meaning by reference to the industry to which the word or phrase relates ( Herbert Adams Pty Ltd V FCT (1932) 47 CLR 222 ). It is considered, in consultation with the Pharmaceutical Health Sector, that 'supplements and aids associated with mammary prostheses' include items that are worn to support and conceal mammary prostheses. In this case, the mastectomy bra is specifically designed to conceal and hold a mammary prosthesis securely in place. As such, the mastectomy bra is covered by Item 15. You state that your range of specialised bras is exactly the same in design with a pocket inside the cups to securely and comfortably fit breast prosthesis. We therefore consider that the products are 'supplements and aids associated with mammary prostheses' as listed in item 15 of Schedule 3 to the GST regulations and the requirement in paragraph 38-45(1)(a) of the GST Act is satisfied. | Detailed Reasoning - Specifically designed for people with an illness or disability:: Issue 1.c of GST Pharmaceutical Health Forum Issues Register deals with the requirement in paragraph 38-45(1)(b) of the GST Act that the thing supplied is 'specifically designed for people with an illness or disability'. In determining whether a medical aid and appliance is 'specifically designed for people with an illness or disability' reference should be made to the designer's/manufacturer's intention of how the good is to be used and its features. Indicators of the designer's/manufacturer's intention of how a good is to be used include how the good is marketed and the type of retail outlets at which the goods can be purchased. You have provided details of the packaging and the marketing methods of the products. The products will be described as specialised bras. We consider that the packaging of the products indicates that the products are 'specifically designed for people with an illness or disability'. The marketing methods reinforce that the products are suitable for use by women who have undergone a medical procedure. | Detailed Reasoning - Not be widely used by people without an illness or disability: Issue 1.d in the ATO's GST Pharmaceutical Health Forum Issues Register provides guidance for determining whether a medical aid or appliance is 'widely used by people without an illness or disability'. In determining whether a medical aid and appliance is used by people without an illness or disability reference should be made to how the wider community uses these goods. That is, the common purpose for which the goods are purchased. Subsection 38-45(1) does not require the GST treatment of a medical aid and appliance to be determined by reference to the actual use for which an item is being purchased but rather focuses on the purpose for which the wider community purchases these products. Your submissions in relation to the requirement that the product is 'not widely used by people without an illness or disability' focus on the nature, price point, and where you plan to target the marketing of the product. ATO ID 2001/472 provides that a specialised bra differs from regular bras and is not widely used by women who have not undergone medical treatment such as a breast surgery. You state that the recommended retail price $X of the products are slightly higher than the normal/ general purpose bras because of the extra workmanship and extra research and testing of the products to ensure they meet the needs of women who had surgery in that the users will have the comfort of a secure fit of the breast prosthesis. In relation to the type of retail outlets at which the product can be purchased, you state that you sell the products through your online store and plan to target certain entities for the supply of the products. Taking into account all the above information, we accept that the common purpose for which the wider community purchases these products is for use by women who have undergone a medical procedure. Accordingly, the supply of the products by you satisfies all of the requirements of section 38-45 of the GST Act, and is GST-free. Please note that the supply of the products is GST-free at every point in the supply chain - from manufacture to consumer.