Issue
Is the entity, a supplier of hair wigs, making a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a wig that is specifically designed for a person with an illness or a disability?
Decision
No, the entity is not making a GST-free supply of a medical aid and appliance under subsection 38-45(1) of the GST Act when it sells a wig which is specifically designed for a person with an illness or a disability. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of wigs. The entity supplies a wig to a person that suffers from an illness that causes total hair loss. The person is allergic to synthetic wigs. Therefore, the wig is specifically designed and manufactured for this individual.
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.
Reasons for Decision
Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances will be GST-free where the medical aid or appliance: • is covered by Schedule 3 of the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations); and • is specifically designed for people with an illness or disability; and • is not widely used by people without an illness or disability.
Wigs are not covered by Schedule 3; nor are they specified in the Regulations. As such, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act.
The entity is registered for GST and the supply meets the other 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 entity is making a taxable supply under section 9-5 of the GST Act.