Private ruling: GST and supply of a product
Published: December 2012

Ruling: Q1: Is the supply of the product GST-free under Subdivision 38-B of the A New System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, the supply of the product is not GST-free under Subdivision 38-B of the GST Act. The supply is taxable under section 9-5 of the GST Act.

Relevant facts and circumstances: The entity is a supplier of a product. The product is designed for use exclusively by people who are incapacitated and who rely on a cane or crutches for mobility. The product offers independence to users of canes and crutches. The product offers safety by minimising the risk of tripping. The product is lightweight and portable and is simple to operate. The entity is registered for goods and services tax (GST).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-B | 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(3)

Reasons for decision: Summary: Subsection 7-1(1) of the GST Act provides that GST is payable on taxable supplies. As such, an entity is liable to pay the GST payable on any taxable supply it makes. Section 9-5 of the GST Act provides that an entity makes a taxable supply if: · it makes a supply for consideration · it makes it in the course or furtherance of an enterprise that it carries on · the supply is connected with Australia, and · it is 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. The entity makes its supply of the product for consideration in the course of carrying on its enterprise in Australia and is registered for GST. As such, the supply satisfies the requirements for a taxable supply in section 9-5 of the GST Act unless it is GST-free or input taxed. The input taxed provisions in the GST Act do not apply to the facts in this case. It is necessary to determine if the GST-free provisions apply. Subdivision 38-B of the GST Act sets out the kinds of supplies relating to the health industry that are GST-free. Of relevance to the issue in this case is subsection 38-45(1) of the GST Act. 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. All the above elements must be satisfied for an item to be GST-free under subsection 38-45(1) of the GST Act. The supply of an item that satisfies subsection 38-45(1) of the GST Act will be GST-free all the way down the supply chain and not only when supplied to a person with an illness or disability. However, pursuant to subsection 38-45(3) of the GST Act, a supplier and purchaser can agree to treat the supply as if it were a taxable supply. Of relevance to this case is item 96 in the table in Schedule 3 to the GST Act (Item 96) which lists 'crutches'. The term 'crutch' is not defined in the GST Act. Therefore, it is necessary to refer to its ordinary meaning. The Macquarie Dictionary Online (2012) defines 'crutch' as 'a staff or support to assist a lame or infirm person in walking, now usually with a cross piece at one end to fit under the armpit'. As such, crutches which are devices used to assist people with injuries or disabilities to walk are covered by Item 96. Also of relevance to this case is item 97 in the table in Schedule 3 to the GST Act (Item 97) which lists 'walking sticks - specialised'. A walking stick (excluding a non-functional or a purely ornamental walking stick) is a hand held device the principal function of which is to assist a person to walk by taking some of the weight of that person where that person is unable to walk unaided. As such, Item 97 would cover canes that people use to assist with their mobility. The product is neither a crutch nor a walking stick/cane and therefore, is not covered by Item 96 or Item 97. There are no other items in the table in Schedule 3 to the GST Act or the GST Regulations that would cover the product. Therefore, as the first requirement in subsection 38-45(1) of the GST Act is not satisfied, the supply of the product will not be GST-free under Subdivision 38-B of the GST Act.

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