Private ruling: GST-free medical aids and appliances
Published: July 2012

Ruling: Q1: Is your supply of electronically operated adjustable beds GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, your supply of electronically operated adjustable beds is a GST-free supply under subsection 38-45(1) of the GST Act.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. · Entity A (you) is registered for goods and services tax (GST). · You manufacture electronically operated adjustable beds (EOA Beds) and sell them to bedding retailers. · The EOA Beds you manufacture are designed and are marketed as beds for the use by the aged, infirm, injured, ill or those suffering sleep disorders, hiatus, arthritic conditions and other similar or associated medical problems. The EOA Beds enable people with illness and disabilities to remain in their home environment and assist family members to aid in their nursing needs. · The design of the EOA Beds is based on a hospital bed mechanism. · The foot end of the EOA Bed can be raised with a knee break that allows the portion of the leg from the knee to the foot to be virtually parallel allowing a non-cramped support shape independently or combined with the elevated head position. · Both ends of the EOA Beds have independent elevation so the bed can be used for different applications to reduce pain or gravity restrictions to areas affected. This assists users that have breathing and circulatory problems. · The back of the EOA Beds can be raised to allow the user to get in and out of bed with ease. · The EOA Beds are specifically designed for people with an illness or disability and are not widely used by people without an illness. You have determined that the majority of the end users buy the EOA Beds to relieve a sleeping issue or back pain due to a medical condition.

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 Subsection 38-45(1)

Reasons for decision: Summary: Section 9-5 of the GST Act states: 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. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*denotes a defined term in section 195-1 of the GST Act) Y make a supply of the beds for consideration in the course of your enterprise. The supply is connected with Australia and you are registered for GST. Further, the supply does not fall within any provision of the GST Act which would be input taxed. Therefore, what remains to be determined is whether your supply is GST-free. Subsection 38-45(1) of the GST Act outlines the circumstances in which the supply of certain medical aids and appliances will be GST-free and states: | Detailed Reasoning - 38-45 Medical aids and appliances: (1) A supply is GST-free if: (a) it is covered by Schedule 3 (medical aids and appliances), or specified in the 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. Subsection 38-45(1) of the GST Act essentially sets out three elements, all of which must be satisfied before a supply can be considered GST-free. These are the supply must be: · listed in the table in Schedule 3 to the GST Act or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), · specifically designed for people with an illness or disability, and · not widely used by people without an illness or disability. | Detailed Reasoning - Listed in the table in Schedule 3 to the GST Act: The category of medical aids and appliances listed in Schedule 3 to the GST Act that is of particular relevance to your supply of the EOA Beds is "Mobility of people with disabilities-physical: bedding for people with disabilities". Within this category, item 60 in the table in Schedule 3 (item 60) lists electronically operated adjustable beds. As such the EOA Bed is covered by item 60 in the table in Schedule 3 to the GST Act. Accordingly, 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: Factors taken into account in determining whether a medical aid or appliance is specifically designed for people with an illness or disability are discussed in the GST Pharmaceutical Health Forum Issues Register. Issue number 1.c. in the GST pharmaceutical health forum issues register states: 1.c. What factors should be taken into account in determining whether a medical aid or appliance 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. In your case, the EOA Bed is not only an effective way to deal with simple aches and pains but also as designed to assist people who suffer from arthritis, back pain, poor circulation, hiatus hernia, stress or medical disabilities to get the comfort and rest that cannot be obtained from normal flat beds. Further, you have advised that the EOA Beds incorporates features, for instance head and leg elevation, which are specifically designed to provide people with illness and various health conditions relief from pain and ease in getting in and out of bed unaided. You have also advised that people who purchase your product do so because of the associated health benefits they derive from its use. Given the above, we consider that the EOA Beds satisfy the requirement of being specifically designed for people with an illness or disability. | Detailed Reasoning - Not widely used by people without an illness or disability: Factors taken into account in determining whether a medical aid or appliance is not widely used by people without an illness or disability are discussed in the GST Pharmaceutical Health Forum Issues Register. Issue number 1.d. in the GST Pharmaceutical Health Forum Issues Register states: 1.d. What factors should be taken into account in 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. Accordingly, it is considered that irregular and uncommon use of a medical aid and appliance in a way contrary to its manufactured purpose will not prevent the good from being GST-free. You have advised that generally the EOA Beds are purchased by aged, ill or disabled people who have difficulty or are unable to get in and out of bed unassisted or who suffer from medical conditions such as hiatus, arthritic conditions and other similar or associated medical conditions. As such, whilst the EOA Beds may be used by other people, they are not widely used by people without an illness or disability. Consequently, the supply of the EOA Beds meets all of the requirements listed in paragraphs 38-45(1)(a) and 38-45(1)(b) of the GST Act. As such, the supply of the EOA Beds is GST-free under subsection 38-45(1) of the GST Act.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.