Issue
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 an overlay that is used for pressure care?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it sells an overlay that is used for pressure care.
Facts
The entity is a supplier of medical aids and appliances. The entity is selling an overlay that is used for pressure care.
The overlay is a piece of undulating foam that is 5cm in thickness.
The overlay is specifically designed to prevent pressure sores (bed sores) by evenly distributing pressure, and to provide appropriate support and comfort to people with an illness or disability when they are sitting or lying down.
The overlay is normally used to assist in the treatment of people with an illness or disability. However, occasionally the overlay is used by people without an illness or disability for their personal comfort.
There is no agreement between the entity and the recipient that the supply is not to be treated as a GST-free supply.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (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.
Item 66 in the table in Schedule 3 (Item 66) lists 'pressure management mattresses and overlays'.
A pressure management mattress or overlay is a mattress or overlay that is designed to provide comfort and to prevent bed sores by evenly distributing the pressure exerted on the patient's body. The overlay the entity is supplying is designed for such a purpose and, therefore, is covered by Item 66.
The overlay is specifically designed for people with an illness or disability. Therefore the second requirement in subsection 38-45(1) of the GST Act is satisfied.
The overlay is occasionally used by people without an illness or disability for their personal comfort. However, it is not widely used by people who do not have an illness or disability. Accordingly, the third requirement of subsection 38-45(1) of the GST Act is also satisfied.
All of the requirements in subsection 38-45(1) of the GST Act are satisfied and there is no agreement between the entity and the recipient that the supply is not to be treated as a GST-free supply. Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it sells an overlay that is used for pressure care.