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Is the entity, a supplier of medical aids and appliances, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a bone density machine?

No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it sells a bone density machine. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity supplies medical aids and appliances and is selling a bone density machine.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Under subsection 38-45(1) of the GST Act a supply of a medical aid and appliance will be GST-free if: • it is covered by Schedule 3 to the GST Act or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations); and • it is specifically designed for people with an illness or disability; and • it is not widely used by people without an illness or disability.

The bone density machine is not GST-free under subsection 38-45(1) of the GST Act, as it is not listed in Schedule 3 to the GST Act or in the Regulations.

The entity is registered for GST and the supply satisfies the positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the sale of the bone density machine is a taxable supply under section 9-5 of the GST Act.