Private ruling: GST and medical aids
Date of advice: 28 March 2022
Published: June 2022
Ruling period: xx
Date scheme commenced: xxxx

Ruling: Q1: Is the supply of the speech amplification device by you to customers in Australia GST free, under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? Summary Yes, the supply is GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Relevant facts and circumstances: 1. You are registered in Australia and for Goods and services tax (GST). 2. You supply speech amplification devices. Reason for decision Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance: (a) is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations), (b) is specifically designed for people with an illness or disability, and (c) is not widely used by people without an illness or disability. You have contended the speech amplification device is covered by Item 14 of Schedule 3 (Item 14) which lists 'speech amplification/clarification aids'. The product information supplied for the device shows that the essential character of the product is that it is a sound amplification device. Therefore, the product is covered by Item 14. For the supply of the products to be GST-free under subsection 38-45(1) of the GST Act, the products must also meet the requirements of paragraph 38-45(1)(b) of the GST Act. That is, they must also be: • specifically designed for people with an illness or disability; and • not widely used by people without an illness or disability. The requirements of subsection 38-45(1) of the GST Act requires that we examine the specific product being supplied and not a class of products. Therefore, in considering the requirements in paragraph 38-45(1)(b) of the GST Act, it is the specific product being supplied that must be specifically designed for a person with an illness or disability and not widely used by a people without an illness or disability. 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 together with its features. • the designer's/manufacturer's intention of how the good is to be used including how the good is marketed and the type of retail outlets at which the good can be purchased. • how it is designed. We need to consider whether the speech amplification device is an aid and appliance designed for people with an illness or disability which are not of a kind used in the wider community. Having regard to how the designer/manufacturer intended the products to be used, they have been specifically modified and designed for someone with an illness or disability. Not widely used by people without an illness or disability Whether a medical aid or appliance is used by people without an illness or disability reference should be made to how the wider community uses the product. That is, the common purpose for which the products are purchased. The GST treatment is not 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. This product is sold through your online website which is targeted to people with an illness or disability. The product is also sold through health professionals. The product is not sold through "mainstream" stores. Therefore, whilst the product may be capable of being used by someone without an illness or disability, the evidence at this point in time suggests the product will not be widely used by people without an illness or disability due to the limitations with where the product is available and how it is marketed. As such, it is considered the product is not widely used by people without an illness or disability. Therefore, the supply of the speech amplification device is GST-free under subsection 38-45(1) of the GST Act. Note - this advice is based on the factual circumstances presented as of the date of this ruling. If the marketing of the product or the channel through which the device is sold changes materially then the product may become a taxable supply. It is advised in that circumstance to request another private ruling.


Reasons for decision: Summary: Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance: (a) is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations), (b) is specifically designed for people with an illness or disability, and (c) is not widely used by people without an illness or disability. You have contended the speech amplification device is covered by Item 14 of Schedule 3 (Item 14) which lists 'speech amplification/clarification aids'. The product information supplied for the device shows that the essential character of the product is that it is a sound amplification device. Therefore, the product is covered by Item 14. For the supply of the products to be GST-free under subsection 38-45(1) of the GST Act, the products must also meet the requirements of paragraph 38-45(1)(b) of the GST Act. That is, they must also be: • specifically designed for people with an illness or disability; and • not widely used by people without an illness or disability. The requirements of subsection 38-45(1) of the GST Act requires that we examine the specific product being supplied and not a class of products. Therefore, in considering the requirements in paragraph 38-45(1)(b) of the GST Act, it is the specific product being supplied that must be specifically designed for a person with an illness or disability and not widely used by a people without an illness or disability. | Detailed Reasoning - 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 together with its features. • the designer's/manufacturer's intention of how the good is to be used including how the good is marketed and the type of retail outlets at which the good can be purchased. • how it is designed. We need to consider whether the speech amplification device is an aid and appliance designed for people with an illness or disability which are not of a kind used in the wider community. Having regard to how the designer/manufacturer intended the products to be used, they have been specifically modified and designed for someone with an illness or disability. | Detailed Reasoning - Not widely used by people without an illness or disability: Whether a medical aid or appliance is used by people without an illness or disability reference should be made to how the wider community uses the product. That is, the common purpose for which the products are purchased. The GST treatment is not 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. This product is sold through your online website which is targeted to people with an illness or disability. The product is also sold through health professionals. The product is not sold through "mainstream" stores. Therefore, whilst the product may be capable of being used by someone without an illness or disability, the evidence at this point in time suggests the product will not be widely used by people without an illness or disability due to the limitations with where the product is available and how it is marketed. As such, it is considered the product is not widely used by people without an illness or disability. Therefore, the supply of the speech amplification device is GST-free under subsection 38-45(1) of the GST Act. Note - this advice is based on the factual circumstances presented as of the date of this ruling. If the marketing of the product or the channel through which the device is sold changes materially then the product may become a taxable supply. It is advised in that circumstance to request another private ruling.