Private ruling: Goods and services tax and medical aids and appliances
Published: May 2013

Ruling: Q1: Are your supplies of the (brand name) (TNS) device GST-free? | A1: Yes. | Q2: Are your supplies of the (brand name) (TNS) electrodes GST-free? | A2: Yes.

Relevant facts and circumstances: You import and sell a device called (brand name) (TNS). The (brand name) (TNS) device uses transcutaneous nerve stimulation (TNS) of the major bifurcation of the trigeminal nerve which runs across the forehead, primarily for treatment and prevention of migraine and tension headaches. The device may also be used to assist relaxation and achieve a sedative effect. The (brand name) (TNS) device uses very precise electric impulses that are delivered to the main branch of the trigeminal nerve to prevent and treat pain in the head area. An external self adhesive electrode is placed on the forehead and is designed in order to cover the supratrochlear and supraorbital nerves bilaterally. The (brand name) (TNS) device inhibits pain, arrests migraine headaches, calms anxiety and soothes stress. Illnesses the (brand name) (TNS) device is used to treat: · Common migraine. · Chronic headache. · Menstrual or catamenial migraine. · Transformed migraine. · Trigeminal neuralgia. · Migraine with aura. · Anxiety and stress disorder. · Ophthalmic migraine/shingles. · Vascular or cluster headache. · Anterior tension headache. · Frontal sinusitis. · Essential Trigeminal Neuralgia. · Morning-after headache. The (brand name) (TNS) device can be used: · For prevention: The device can be used to increase the production of endorphins and raises the trigger threshold of the pain. The result is that attacks are less frequent. · To replace pain killing medication: With no side-effects, the product can replace or considerably reduce the consumption of painkilling medication. · For relief: The device can be used to block pain and provide relief during attacks. · To fight against stress: An anti-stress programme produces general relaxation and a strong sense of wellbeing. Results · A certain percentage of users of the (brand name) (TNS) device describe a definite improvement. · A certain percentage of users significantly reduce their consumption of drugs. · A certain percentage of tension headaches are halted by brand name's programme. · A certain percentage reduction in head pain sensitivity after a certain number of minutes of treatment with (brand name) (TNS). · A certain percentage significant reduction in the pain of the attack after a certain number of minute's treatment with the (brand name) programme. · A certain percentage reduction in the frequency and duration of painful episodes. The (brand name) (TNS) device can be used by people without an illness or disability, for example, the prevention of general stress and anxiety. However, you advised that the (brand name) (TNS) device is used overwhelmingly by people who suffer from various forms of migraine. You import (brand name) electrodes. You advised that you supply (brand name) electrodes as spare parts for the (brand name) (TNS) device. These electrodes are for the (brand name) (TNS) device. The (brand name) electrodes are designed to be used a certain number of times and generally last a minimum of a certain number of days.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 paragraph 13-10(b) | A New Tax System (Goods and Services Tax) Act 1999 section 38-45

Reasons for decision: Summary: Your supply of the (brand name) (TNS) device is a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because: · the device is covered by item 141 in the table in Schedule 3 to the GST Act (it is a TENS machine) · the device is specifically designed for people with an illness or disability, and · the device would not be widely used by people without an illness or disability. | Detailed Reasoning - Detailed reasoning: A sale of a medical aid or appliance may be GST-free under section 38-45(1) of the GST Act, which states: 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. Item 110 in the table in Schedule 3 to the GST Act lists patient control analgesia under the category heading 'pain relief delivery systems'. Item 141 in the table in Schedule 3 to the GST Act lists transcutaneous nerve stimulator machines (TENS machines). In accordance with GST Pharmaceutical Health Forum - issues register, a patient control analgesia device is: 'A device containing pain relief medication which can be self administered by the patient. When the patient feels pain, they press a button to inject the medicine through an intravenous (IV) tube into their veins.'' The (brand name) (TNS) device does not meet the definition of patient control analgesia in the GST Pharmaceutical Health Forum - issues register, as the (brand name) (TNS) device does not inject medicine into the patient's veins. Black's Medical Dictionary (1995) defines 'transcutaneous nerve stimulation' as: 'A method of electrical stimulation that is being used for the relief of pain, including that of migraine, neuralgia and phantom limbs. Known as TENS, its mode of action appears to have some resemblance to that of acupuncture. Several controlled trials suggest that it provides at least a modicum of relief of pain after operations, thereby reducing the amount of analgesics that may be called for'. In accordance with GST Pharmaceutical Health Forum - issues register, a TENS machine is: 'A device which uses soothing pulses to relieve chronic or acute pain. These pulses are sent via electrodes which are placed on or near an area of pain. The usual setting for conventional or high frequency TENS involve pulse rates in the 100-150 (pulses per second) range. In most cases the source of this electrical current will be a 9 volt battery'. A TENS machine is developed primarily for the purpose of pain relief. The (brand name) (TNS) device uses transcutaneous nerve stimulation of the major bifurcation of the trigeminal nerve which runs across the forehead, primarily for treatment and prevention of migraine and tension headaches. The (brand name) (TNS) uses very precise electric impulses that are delivered to the main branch of the trigeminal nerve to prevent and treat pain in the head area. An external self adhesive electrode is placed on the forehead and is designed in order to cover the supratrochlear and supraorbital nerves bilaterally. Hence, the (brand name) (TNS) device is a TENS machine. Therefore, it is covered by item 141 in the table in Schedule 3 to the GST Act. In accordance with issue 1.c of the GST Pharmaceutical Health Forum - issues register, 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 it's features. In accordance with issue 1.d of the GST Pharmaceutical Health Forum - issues register 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. The (brand name) (TNS) device inhibits pain, arrests migraine headaches, calms anxiety and soothes stress. Illnesses the (brand name) (TNS) device is used to treat: · Common migraine. · Chronic headache. · Menstrual or catamenial migraine. · Transformed migraine. · Trigeminal neuralgia. · Migraine with aura. · Anxiety and stress disorder. · Ophthalmic migraine/shingles. · Vascular or cluster headache. · Anterior tension headache. · Frontal sinusitis. · Essential Trigeminal Neuralgia. · Morning-after headache. The (brand name) (TNS) device can be used: · For prevention: The device can be used to increase the production of endorphins and raises the trigger threshold of the pain. The result is that attacks are less frequent. · To replace pain killing medication: With no side-effects, the product can replace or considerably reduce the consumption of painkilling medication. · For relief: The device can be used to block pain and provide relief during attacks. · To fight against stress: An anti-stress programme produces general relaxation and a strong sense of wellbeing. A certain percentage of users of the (brand name) (TNS) device describe a definite improvement. A certain percentage of users significantly reduce their consumption of drugs. A certain percentage of tension headaches are halted by brand name's programme. A certain percentage reduction in head pain sensitivity after a certain number of minutes of treatment with (brand name) (TNS). A certain percentage significant reduction in the pain of the attack after a certain number of minutes' treatment with the (brand name) programme. A certain percentage reduction in the frequency and duration of painful episodes. We consider that pain and stress are illnesses. The (brand name) (TNS) device can be used by people without an illness or disability, for example, the prevention of general stress and anxiety. However, you advised that the (brand name) (TNS) device is used overwhelmingly by people who suffer from various forms of migraine. Considering the designer's/manufacturer's intention of how the (brand name) (TNS) device is to be used and its features, we consider that the (brand name) (TNS) device is specifically designed for people with an illness or disability. As the common purpose for which the (brand name) (TNS) device would be purchased by the wider community is pain relief, the device would not be widely used by people without an illness or disability. Therefore, as all of the requirements of subsection 38-45(1) of the GST Act are satisfied, your sales of the (brand name) (TNS) device are GST-free. | Detailed Reasoning - Additional information: In accordance with paragraph 13-10(b) of the GST Act, your importations of the (brand name) (TNS) device are non-taxable importations because the supply of this device is GST-free. | Summary: Your supplies of (brand name) electrodes are GST-free as they are supplies of spare parts for, and they are specifically designed as spare parts for, a TENS machine, the supply of which is GST-free under subsection 38-45(1) of the GST Act. | Detailed Reasoning - Detailed reasoning: Subsection 38-45(2) of the GST Act states: A supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designed as a spare part for, another thing the supply of which would be GST-free under subsection (1). In accordance with issue 1.g of the GST Pharmaceutical Health Forum - issues register 'a spare part is a part which has been specifically designed to replace a faulty, worn, or broken part of a medical aid or appliance'. You advised that you supply (brand name) electrodes as spare parts for the (brand name) (TNS) device. These electrodes are for the (brand name) (TNS) device. The (brand name) electrodes are designed in order to cover the supratrochlear and supraorbital nerves bilaterally. The (brand name) electrodes are self adhesive. The (brand name) electrodes are designed to be used a certain number of times and generally last a minimum of a certain number of days. Therefore, the (brand name) electrodes are parts specifically designed to replace a faulty, worn or broken part of a TENS machine and you supply them as such. Hence, you supply the electrodes as spare parts for, and they are specifically designed as spare parts for, a TENS machine, the supply of which is GST-free under subsection 38-45(1) of the GST Act. Therefore, your supplies of (brand) electrodes are GST-free under subsection 38-45(2) of the GST Act. | Detailed Reasoning - Additional information: In accordance with paragraph 13-10(b) of the GST Act, your importations of (brand name) electrodes are non-taxable importations because the supply of these electrodes is GST-free.