Private ruling: GST - sale of a going concern
Date of advice: 24 October 2025
Published: 15 December 2025
Ruling period: 1 October 20XX to 30 September 20XX
Date scheme commenced: 1 October 20XX

Ruling: Q1: Are your supplies XXX products a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, your supply of XXX products is not GST free.

Relevant facts and circumstances: You are registered for Goods and Services Tax (GST). The XXX products are not custom-designed or tailored to individual medical needs. You submit that the product is a 'pressure management garment and lymphoedema pumps' of a kind listed in item 71 of Schedule 3 (item 71).

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) Regulations 2019 subsection 38.45.01(1)

Reasons for decision: Summary: Under section 9-5 of the GST Act, a supply will be 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 the indirect tax zone; and (d) you are registered, or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In this case, you supply the XXX products for consideration in the course of your enterprise in Australia. The supply is connected with the indirect tax zone as the supply is made in Australia, and you are registered for GST. There is no provision in Division 40 of the GST Act that are relevant to make this supply input taxed. Therefore, we need to determine whether your supply is GST-free in accordance with Subdivision 38-B of the GST Act . Subsection 38-45(1) of the GST Act provides that the supply of a medical aid or appliance is GST-free if it is: (a) covered by an item in Schedule 3 (medical aids and appliances) to the GST Act (Schedule 3) or covered by the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations); and (b) specifically designed for people with an illness or disability, and not widely used by people without an illness or disability. All the above requirements need to be satisfied for a medical aid or appliance to be GST-free. 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 the good is to be used include how the good is marketed and the type of retail outlets at which the good can be purchased. It is how it is designed that is the test. 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 goods. That is, the common purpose for which the goods 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. Although the XXX products may be specifically designed for people with an illness or disability and not widely used by people without an illness or disability, the supply of the XXX products is not GST-free unless it is covered by Schedule 3 or specified in the GST Regulations. You submit that the product is a 'pressure management garment and lymphoedema pumps' of a kind listed in item 71 of Schedule 3 (item 71). | Detailed Reasoning - Pressure management garments: A pressure management garment is a covering specifically designed to be worn or applied to a particular part of the body which exerts sufficient, continuous and uniform pressure on the wearer to be of therapeutic benefit. Pressure management garments play an integral role in managing significant burn injuries, vein disease, thrombosis prophylaxis, and lymphoedema. The Australasian Lymphology Association (ALA) endorses the use of compression in its various forms for the effective management of lymphoedema. Compression is considered both a clinically effective and a cost-effective treatment for people with lymphoedema. Well applied and appropriate compression improves lymphatic drainage while reducing lymph accumulation, inflammatory processes, and the risk of infection. | Detailed Reasoning - Compression pump: Compression pumps used in lymphoedema treatment gently squeeze the limb to force lymph fluid, which has accumulated in the tissues, to drain from the limb through the lymphatic system. Lymphoedema pumps are used at relatively low pressures so as not to damage the superficial lymphatic vessels, which are very small and fragile. These can be easily damaged and can be broken when a pressure of more than 60mmHg is applied. A lymphoedema pump generally consists of an inflatable sleeve which is placed over the arm or leg, and an electric pump which slowly inflates the sleeve to a preset pressure (usually no more than 40mmHg) for a few minutes and then deflates for a few minutes in a repeated cycle. The squeezing action of a lymphoedema pump is quite slow. It may be a single chambered or sequential multi-chambered compression device. Essential character tests have been established by the Courts in cases such as Thomson Australia Holdings Pty Ltd v. Federal Commissioner of Taxation (1988) 20 FCR 85; 88 ATC 4916; (1988) 19 ATR 1896 and FC of T v. Rotary Offset Press Pty Ltd 71 ATC 4170; (1971) 2 ATR 411 . Davies J. said in Thomson Australia Holdings: the task of the court is to determine the essential character of the goods, what essentially the goods are, not some characteristic that the goods might have. Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part. Applying the essential character test as outlined by Davies J. in Thomson Australia Holdings Pty Ltd v. Federal Commissioner of Taxation , the essential character of the product is not compression; rather, the XXX products consist of a XXX gel icepack, which is engineered to retain cold temperatures for extended periods while remaining soft and flexible to contour around body joints or muscle groups. In this case, we do not consider the XXX products are pressure management garments or lymphoedema pumps as they do not provide the continuous, uniform compression therapeutically required for burn injuries, vein disease, thrombosis prophylaxis, and lymphoedema, nor do they deliver the controlled, low-pressure, sequential compression essential for safe and effective lymphatic drainage. Therefore, they are not covered by item 71 of Schedule 3. Section 38-45.01 of the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations) has been made for the purposes of paragraph 38-45(1)(a) of the GST Act . There are no items in the GST Regulations that may cover the XXX products. Therefore, the supply of XXX products is not GST-free under section 38-45(1) of the GST Act. Since all the requirements under section 9-5 of the GST Act are satisfied, the supply of the XXX products is a taxable supply and subject to GST.