Private ruling: GST and waterproof pillow protectors and allergy protective beddings
Date of advice: 29 October 2025
Published: 22 December 2025

Ruling: Q1: Is the supply of waterproof pillow protectors by Entity A (you) a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Service Tax) Act 1999 (GST Act)? | A1: No, your supply of waterproof pillow protectors is not a GST-free supply under subsection 38-45(1) of the GST Act.

Relevant facts and circumstances: You are registered for goods and services tax (GST) and manufacturers bedding products, including waterproof pillow protectors (product). You mostly sell the product to retail outlets.

Relevant legislative provisions: A New Tax System (Goods and Service Tax) Act 1999 section 9-5 | A New Tax System (Goods and Service Tax) Act 1999 section 38-45 | A New Tax System (Goods and Service Tax) Act 1999 Schedule 3 | A New Tax System (Goods and Services Tax) Regulations 2019 section 38-45.01

Reasons for decision: Summary: Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free if: (a) it is covered by Schedule 3 (medical aids and appliances) to the GST Act (Schedule 3) or specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST 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. If a supply of a medical aid or appliance satisfies all the requirements above, the supply is GST-free throughout the supply chain and not only when supplied to a person who has an illness or disability, unless the supplier and the recipient agree to treat the supply as if it were taxable pursuant to subsection 38-45(3) of the GST Act | Detailed Reasoning - Is your supply of waterproof pillow protectors covered by Schedule 3 or the GST Regulations?: With regards to the first requirement in paragraph 38-45(1)(a) of the GST Act, item 16 of Schedule 3 to the GST Act (Item 16) refers to 'waterproof covers or mattress protectors.' While the term 'waterproof cover' is not defined, it may be interpreted broadly to include protective coverings for bedding items. A waterproof pillow protector is a type of cover for a pillow and is waterproof meeting the ordinary meaning of 'waterproof cover'. On this basis, a waterproof pillow protector is considered a waterproof cover for the purposes of Item 16. Accordingly, your supply of waterproof pillow protectors is covered under Item 16, thereby satisfying paragraph 38-45(1)(a) of the GST Act. | Detailed Reasoning - Specifically designed for an illness or disability and not widely used by people without an illness or disability.: With regards to paragraph 38-45(1)(b) of the GST Act determining whether a product is specifically designed for people with an illness or disability and not widely used by people without an illness or disability requires consideration of the product itself, its design objectives, and both its intended and actual use. These two tests are questions of fact and degree. | Detailed Reasoning - 'Specifically designed for' test: Whether an item is specifically designed for people with an illness or disability is determined by objectively assessing its design features and characteristics. This includes consideration of the designer's or manufacturer's intended use of the product, as evidenced by its features. The intended use is to be determined through an objective evaluation of all relevant evidence, including how the product is marketed and the types of outlets through which it is sold. Where there is no direct evidence of the designer's or manufacturer's purpose, marketing materials and other commercial information may be used as proxy indicators of the intended design. The Commissioner's view on how the key elements under paragraph 38-45(1)(b) of the GST Act are to be interpreted is set out in Goods and Services Tax Determination GSTD 2021/2 Goods and services tax: adjustable beds, pressure mattresses and pressure management overlays . Although GSTD 2021/2 was issued in the context of adjustable beds for people with disabilities, the principles discussed are equally applicable to other products that may be considered for GST-free treatment under subsection 38-45(1) of the GST Act. Waterproof bedding products, including pillow protectors are only GST-free if they are specifically designed for people with an illness or disability and are not widely used by people without such conditions. However, where waterproof pillow protectors are designed for or widely used by the general population to protect pillows from damage caused by perspiration, spills, or stains, they are not considered to be specifically designed for people with an illness or disability. In this case, the essential character of the waterproof pillow protectors is to provide general protection against moisture and staining. While the product may be used by individuals with conditions such as incontinence, it is also commonly used by people without an illness or disability for general hygiene or perspiration purposes. The design features and marketing of the product indicate that it is intended for a broad consumer market, rather than being specifically tailored for individuals with an illness or disability. Accordingly, the product does not meet the requirement of being specifically designed for people with an illness or disability, and therefore does not satisfy the first limb of paragraph 38-45(1)(b) of the GST Act. | Detailed Reasoning - 'Not widely used' test: For completeness, the 'not widely used' test under paragraph 38-45(1)(b) of the GST Act has also been considered. Whether an item is not widely used by people without an illness or disability is a question of degree and judgment. As outlined in paragraphs 8 to 10 of GSTD 2021/2, the phrase takes its ordinary meaning in context. The Commissioner considers that the test is not satisfied if the product is widely purchased by or on behalf of people without an illness or disability, regardless of how those individuals actually use the product. In this context, 'not widely used' means not used by many people who do not have an illness or disability. Relevant factors include whether the product is widely sold in general retail outlets that cater to the broader public, and whether marketing materials promote the product as enhancing general lifestyle or convenience. In this case the waterproof pillow protectors are widely sold through mainstream retail channels and are marketed as general bedding accessories for protecting pillows from perspiration, spills, and stains. This indicates that the product is intended for and used by a broad consumer base, including people without an illness or disability. As such, the product does not satisfy the second limb of paragraph 38-45(1)(b) of the GST Act. Therefore, the supply of the waterproof pillow protector is not a GST-free supply under subsection 38-45(1) of the GST Act and is a taxable supply where it meets the requirements of a taxable supply under section 9-5 of the GST Act.