Private ruling: GST and the supply of compression socks
Date of advice: 22 February 2024
Published: 8 April 2024
Ruling period: Applies from 22 February 2024 to 29 February 2024

Ruling: Q1: Is the supply of compression socks (Travel Socks) a GST-free medical aid or appliance under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, the supply of the Travel Socks is not a GST-free medical aid or appliance under subsection 38-45(1) of the GST Act. The Supply of the Travel Socks is a taxable supply as the requirements under section 9-5 are otherwise satisfied.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You carry on an enterprise which involves selling Travel Socks. You and the recipient the supplies did not agree that the supply of the travel compression socks are not to be treated as GST-free supplies.

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) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 3 | A New Tax System (Goods and Services Tax) Regulations 2019 section 38-45.01

Reasons for decision: Detailed Reasoning - GST-free medical aids and appliances: Division 38 of the GST Act sets out those supplies that are GST-free. Relevantly, 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), 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 | Detailed Reasoning - Paragraph 38-45(1)(a): With regards to the first requirement, Item 7 in the table to subsection 38-45.01(1) to the GST Regulations (Item 7) specifies a 'compression garment'. Travel Socks are considered to be a 'compression garment' as specified in Item 7 and therefore satisfies the requirement of paragraph 38-45(1)(a) of the GST Act. | Detailed Reasoning - Paragraph 38-45(1)(b): With regards to the second requirement in paragraph 38-45(1)(b) a compression garment is only GST-free if they are: Travel Socks have a compression level. Travel Socks are designed with a level of compression that is of therapeutic benefit to people who are flying with the result that the painful leg discomfort due to swelling and poor circulation experienced by many air travellers is relieved. Travel Socks are marketed to anyone in the general community to use when flying who can be exposed to prolonged inactivity and pressure changes on airplanes toprevent their legs from swelling, aching, or having poor circulation. The marketing and product information indicates that Travel Socks are not specifically designed for people with an illness or disability and are widely used by people in the general community who don't have an illness or disability. A product that is designed for an otherwise healthy person to prevent an illness or disability does not satisfy this requirement. | Detailed Reasoning - Conclusion: As the requirements of paragraph 38-45(1)(b) are not satisfied the supply of Travel Socks are not a GST-free medical aid and appliance under subsection 38-45(1) of the GST Act. On the facts provided, the supply of Travel Socks is a taxable supply on which GST is payable as the requirements of section 9-5 of the GST Act are otherwise satisfied.