Private ruling: GST and the supply of products for use by people with disabilities
Published: January 2013

Ruling: Q1: Is your supply and installation of products for use by people with disabilities GST-free? | A1: Your supply and installation of products for use by people with disabilities is both taxable and GST-free.

Relevant facts and circumstances: You are registered for goods and services tax (GST) and supply and install a range of care products that are specifically designed for use by people with disabilities. Your care products are not widely used by people without disabilities. You and your clients have not agreed, pursuant to subsection 38-45(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), to treat the supply of any products that would be GST-free as being not GST-free. Prices for care products include a premium for the modifications, design requirements and attachments that are included and are therefore often more expensive than standard products. A range of price breakdowns was provided as well as for replacement parts. All care products are designed and the installation instructions are prescriptive so that the products and installation meet the Australian Standard AS1428.1 -2009 which pertains to care/disability bathroom products.

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 Subsection 38-45(2) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(3) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 3 | A New Tax System (Goods and Services Tax) Regulations 1999 Schedule 3

Reasons for decision: Summary: Section 9-5 of the GST Act provides that you make a taxable supply if: · you make the supply for consideration · the supply is made in the course or furtherance of an enterprise that you can carry on · the supply is connected with Australia · you are registered or required to be registered for GST, and · the supply is not GST-free or input taxed. You are registered for GST and make your supplies for consideration in the course or furtherance of an enterprise that you carry on in Australia. As such, your supply meets all the requirements of section 9-5 of the GST Act. However, under subsection 38-45(1) of the GST Act, the supply of a medical aid or appliance is GST-free where the medical aid or appliance: · is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) · is specifically designed for people with an illness or disability, and · is not widely used by people without an illness or disability. A medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act is GST-free all along the supply chain and not only when it is supplied to a person with an illness or disability. Under subsection 38-45(2) of the GST Act, 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 38-45(1) of the GST Act. Some of the care products that you supply satisfy the requirements in subsection 38-45(1) of the GST Act and are GST-free. Those products that do not satisfy subsection 38-45(1) of the GST Act are taxable supplies under section 9-5 of the GST Act. | Detailed Reasoning - Installation: The GST Act does not provide for the supply of labour services relating to medical aids and appliances to be GST-free. For example, labour for the installation of a GST-free medical aid or appliance that is not provided by the supplier of the medical aid or appliance, or that is provided by the same supplier but in a later transaction that is distinct and separate to the supply of the medical aid or appliance, does not form part of the GST-free supply of the medical aid or appliance and is not GST-free under subsection 38-45(1) of the GST Act. However, where the medical aid or appliance is supplied together with a labour component as part of one single transaction, the GST treatment of that transaction will depend on how the supply is characterised. A supply of a medical aid or appliance together with a labour component may be characterised in one of three ways: 1. the main supply is the GST-free medical aid or appliance and the labour is integral, ancillary or incidental to that main supply in this case, there is a single GST-free supply of a medical aid or appliance (which includes the labour) 2. the main supply is the labour (as is usually the case for repair work) and the GST-free medical aid or appliance (or most commonly, its GST-free spare part) is integral, ancillary or incidental to that main supply in this case, there is a single taxable supply of labour and the GST-free aid/appliance or spare part also becomes taxable, or 3. there are separately identifiable supplies of GST-free medical aids/appliances and labour, neither of which is integral, ancillary or incidental to the other in this case, the supplies are partly taxable and partly GST-free and must be apportioned on a reasonable basis. Some indicators that something may be integral, ancillary or incidental to another thing are: · it represents a marginal proportion of the total value of the package compared to the dominant part · it is necessary or contributes to the supply as a whole but cannot be identified as the dominant part of the supply · it contributes to the proper performance of the contract to supply the dominant part, and · a supplier would reasonably conclude that it does not constitute for customers an aim in itself, but is a means of better enjoying the dominant thing supplied. Therefore, a part of a supply will be integral, ancillary or incidental to another part of the supply where it is insignificant in value or function, or merely complements the dominant part of the supply. Where the installation is integral to the supply of the care products, we consider that the installation of those products is not the dominant part of the supply and merely complements the main supply of the products.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.