Private ruling: GST-free medical appliances
Published: August 2015
Date scheme commenced: An entity has commenced the exclusive distribution in Australia of a product range of medical appliances.

Ruling: Q1: Is the entity making a GST-free supply of medical aids and appliances, under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies medical appliances? | A1: Yes. | Q2: Is the entity making a GST-free supply, under subsection 38-45(2) of the GST Act, when it supplies accessories for medical appliances? | A2: Yes.

Relevant facts and circumstances: An entity has commenced the exclusive distribution in Australia of a product range of medical appliances. The medical appliances are used in adult or paediatric mode. The medical appliances are manufactured overseas and are developed in partnership with customers to address real-life clinical needs. There will be no agreement between the entity and its recipients that the supplies of the medical appliances and accessories will not be treated as a GST-free supply.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1) | subsection 38-45(2) | Schedule 3 | Schedule 3 table item 123 | Schedule 3 table item 127

Reasons for decision: Summary: Yes, the entity is making a GST-free supply of medical aids and appliances, under subsection 38-45(1) of the GST Act, when it supplies medical appliances. Detailed reasoning Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances 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), and • is specifically designed for people with an illness or disability, and • is not widely used by people without an illness or disability. In this case the medical appliances are covered by an item of Schedule 3 to subsection 38-45(1) of the GST Act. Further, the medical appliances are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability. As all criteria contained in subsection 38-45(1) have been satisfied the medical appliances are GST-free medical aids and appliances. | Detailed Reasoning - Question 2: Summary Yes, the entity is making a GST-free supply, under subsection 38-45(2) of the GST Act, when it supplies the accessories for the above mentioned medical appliances. Detailed reasoning Subsection 38-45(2) of the GST Act provides that a supply of a spare part is a GST-free supply if the spare part: • is supplied as a spare part for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act, and • is specifically designed as a spare part for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act. In this case, it is accepted that the medical appliances mentioned above are GST-free. Therefore, parts used in conjunction with the medical appliances are accessories to the medical appliances. The accessories will be supplied for medical appliances that are GST-free under subsection 38-45(1) of the GST Act. Therefore, in the case an accessory is supplied to replace a worn or faulty component of GST-free medical appliances then the spare part will be GST-free for the purposes of the GST Act. Therefore, the entity will be making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies spare parts for the medical appliances.