Private ruling: Incontinence medical appliance
Date of advice: 12 September 2022
Published: November 2022
Ruling period: X XXXX XXXX to XX XXXX XXXX
Date scheme commenced: X XXXX XXXX

Ruling: Q1: Is the entity, making a GST-free supply under subsection 38-451 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies the XXX? | A1: Yes, the XXX is GST-free under subsection 38-45(1) of the GST Act.

Relevant facts and circumstances: • XXX (You) have been registered for GST from XXX. • You supply a muscle exercise device (the device) in the retail market. • You are a XXX entity for tax purposes. • You XXX the device into XXX and it is warehoused in your own name. • You provided your exclusive website that you supply the device from through XXX. You do not supply the product to retail stores. The product was previously available on XXX. • Your website states: − XXX. • The device is XXX (XXX) registered and a XXX under XXX. • Within your XXX, the product is described as: XXX • There is no agreement between the entity and the recipient that the supply will not be treated as a GST-free supply.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 - Section 38-45 | A New Tax System (Goods and Services Tax) Act 1999 - Schedule 3

Reasons for decision: Summary: Yes, the device is a GST-free under subsection 38-45(1) of the GST Act as it is listed in Item 20 in the table in Schedule 3 to the GST Act (Item 20) as a medical appliance and it is designed for people with an illness or disability and is not widely used by people without an illness or disability. | Detailed Reasoning - Detailed reasoning: 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 2019 (GST Regulations); and • is specifically designed for people with an illness or disability; and • is not widely used by people without an illness or disability. The only item of relevance to this case is Item 20. Item 20 lists 'incontinence appliances'. The product has a number of purposes for which it is used other than incontinence purposes such as XXX. The product is a XXX which strengthens the pelvic floor muscles. Strengthening the pelvic floor muscles can help treat incontinence and other things including prevention of incontinence. It is considered that whilst the product can be used for other things the essential character of the product is to strengthen the pelvic floor to treat incontinence and therefore is an incontinence appliance. Therefore, the product is covered by Item 20. For the supply of the product to be GST-free under subsection 38-45(1) of the GST Act, the product must also meet the requirements of paragraph 38-45(1)(b) of the GST Act. That is, it must also be: • specifically designed for people with an illness or disability; and • not widely used by 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 product is designed for people with an illness or disability. Having regard to how the designer/manufacturer intended the products to be used which is indicated on the EU declaration of conformity, this product has been specifically designed to treat the pelvic floor muscles to treat various stress, mixed and urge incontinence. Therefore, it is considered that it is specifically 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 XXX. The product is not sold through "mainstream" retail stores within Australia. The product was XXX available on XXX. The product is marketed to strengthen a women's pelvic floor muscles to treat a number of conditions, in the main being for various types of incontinence or disorders that can cause incontinence such as prolapse. The product is also marketed for XXX. The product is marketed to be able to be used to strengthen the pelvic floor to prevent pelvic floor disorders. It is considered the marketing of the product strongly leans towards the product being marketed for someone who already has an illness or disability including incontinence rather than for preventative measures. Whilst it can be used by women as a preventative to incontinence, the marketing of the product suggests it is likely to be predominantly used by people who do have an illness or disability. Therefore, the supply of the incontinence appliance 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.