GST - medical aids and appliances

1 Are Entity A's supplies of the Medical aids GST-free under subsection 38-45(1) of the A New Tax System (Goods and Service Tax) Act 1999 (GST Act)?

1 No, Entity A's supplies of the Medical Aids are not GST-free under subsection 38-45(1) of the GST Act. Question 2 Are Entity A's supplies of the Medical aids GST-free under subsection 38-45(1) of the GST Act? Answer 2 No, Entity A's supplies of the Medical aidsare not GST-free under subsection 38-45(1) of the GST Act. Question 3 Are Entity A's supplies of theMedical aids GST-free under subsection 38-45(1) of the GST Act? Answer 3 No, Entity A's Medical aids are not GST-free under subsection 38-45(1) of the GST Act. Question 4 Are Entity A's supplies of the Medical aids GST-free under subsection 38-45(1) of the GST Act? Answer 4 Yes, Entity A's supplies of the Medical aids are GST-free under subsection 38-45(1) of the GST Act. Question 5 Is Entity A's supply of the Product A GST-free under subsection 38-45(1) of the GST Act? Answer 5 Yes, Entity A's supply of Product A is GST-free under subsection 38-45(1) of the GST Act. Question 6 Are Entity A's supplies of the Medical aids GST-free under subsection 38-45(1) of the GST Act? Answer 6 Yes, Entity A's supplies of Medical aids are GST-free under subsection 38-45(1) of the GST Act. Question 7

Are Entity A's supplies of the Medical aids GST-free under subsection 38-45(1) of the GST Act? Answer 7 Yes, Entity A's supplies of the Medical aids are GST-free under subsection 38-45(1) of the GST Act. Question 8 Are Entity A's supplies of the xxx GST-free under subsection 38-45(1) of the GST Act? Answer 8 Entity A's supply of xx Kit 1 is partly a taxable supply and partly a GST-free supply. Entity A's supply of xx Kit 2 is GST-free under subsection 38-45(1) of the GST Act. No, Entity A's supplies of xx Kits 3 to 5 are not GST-free under subsection 38-45(1) of the GST Act: This ruling applies for the following period : DD MM 20YY to DD MM 20YY

Entity A is registered for GST. Entity A is in the business of manufacturing and selling xxx products and accessories, including: •                     List of medical aids supplied Entity A's Medical Aids, xxxx are designed for, and widely used by, people to xxxx from damage of various causes, including but not limited to, xxxx. Although these products are designed to protect different aspects of the xxxx, they share similar characteristics and features, such as their waterproof quality and allergen barriers. Entity A's xx, Product A, xx are designed to be placed on a xx or xx, or over a xx, for the purpose of soaking up liquid from xx. The products can be removed without the need to change the xx or xx on the xx or xx. Entity A's xx Packs contain a combination of two or more of their products Entity A sell and market their products via their website. Entity A's various products are also sold through the following channels: •         healthcare providers. •         xx stores, •         department stores. •         commercial sales for hotels and motels Entity A's retailers and suppliers advertise, market and retail the products in a similar way to Entity A.

Several of Entity A's products are renamed and repackaged by Entity A and its various retailers and suppliers. No changes are made to the physical characteristics or attributes of Entity's products when they are rebranded or renamed by one of your retailers. Entity A does not have any agreements with the recipient of their supplies to treat their products as taxable.

A New Tax System (Goods and Service Tax) Act 1999 section 9-5 A New Tax System (Goods and Service Tax) Act 1999 section 9-30 A New Tax System (Goods and Service Tax) Act 1999 section 38-45 A New Tax System (Goods and Service Tax) Act 1999 section 182-10 A New Tax System (Goods and Service Tax) Act 1999 section 182-15 A New Tax System (Goods and Service Tax) Act 1999 Schedule 3

Question 1 Subsection 38-45(1) of the GST Act states: (1)         A supply is GST-free if: (a)       it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and (b)       the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability. If a medical aid or appliance satisfies all of the requirements above, the supply is GST-free throughout the supply chain and not only when supplied to a person who has an illness or disability (IOD), unless the supplier and the recipient agree to treat the supply as if it were taxable pursuant to subsection 38-45(3) of the GST Act. Entity A does not have any agreements with the recipients of their supplies to treat the Medical Aids as taxable, therefore subsection 38-45(3) of the GST Act is not relevant.

The supply of the same product is GST-free no matter who it is supplied to and at all points in the supply chain. As Entity A supplies products with the same physical characteristics that have been rebranded for different retailers, when assessing each product and whether it satisfies subsection 38-45(1) of the GST Act, it needs to be determined which products are the supply of the same 'thing'. Are any of the products identical? Whether the 'thing supplied' for the purposes of subsection 38-45(1) of the GST Act is different or identical to another item will depend on the facts and circumstances in each case. If two products are identical, the products need to be considered together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied.

While not definitive, we take an objective view of the physical functions, characteristics and attributes of the goods to determine if the physical functions, characteristics and attributes of two or more goods are identical, irrespective of their labelling, description or marketing. Although the name, packaging or marketing of a good may be used to emphasise the differences between products, these factors tend to be of lesser importance in determining if the product is identical. If two or more goods have the same or identical physical functions, characteristics and attributes, we consider that they are the same thing for the purposes of subsection 38-45(1) of the GST Act. Where two or more goods are the same thing, how each of the goods are marketed and the type of outlets they are sold through, needs to be considered in their totality in determining whether the product satisfies the requirement under subsection 38-45(1) of the GST Act.

Accordingly, if you merely change the name or packaging of one of your products, and you do not change any physical functions, characteristics or attributes of the product (such as changing the volume of liquid which can be absorxxxx or the type of fabric), the product will have the same GST classification. Each rebranding of the product will need to be considered together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied. Additionally, where a product shares the same physical functions, characteristics or attributes but is available in different sizes according to the size of the xxx (e.g., king, queen, single, etc.) the same GST classification applies to each sizing as they are essentially the same product. Based on the information provided, some of Entity A's products are identical and are the supply of the same 'thing' for the purposes of subsection 38-45(1) of the GST Act. We must consider each product within that group together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied. Are the Medical Aids covered by Schedule 3?

Paragraph 38-45(1)(a) of the GST Act requires for the thing to be covered by the list of medical aids and appliances in Schedule 3 to the GST Act or the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations). There are no items in the GST Regulations that are relevant to Entity A's Medical Aids. Item 16 of Schedule 3 to the GST Act (Item 16) lists 'waterproof covers or xx. Entity A's xx are waterproof. Therefore, Entity A's products are 'Medical Aids' for the purposes of Item 16, satisfying paragraph 38-45(1)(a) of the GST Act. Specifically designed for people with an IOD, and not widely used by people without, an IOD In determining whether a product is specifically designed for people with an IOD and not widely used by people without an IOD requires the consideration of the product itself, its design objectives, and both its intended and actual use. These two tests are questions of fact and degree.

Although the list of medical aids and appliances under Schedule 3 to the GST Act and the GST Regulations suggests a statutory purpose or working presumption to confer a prima facie GST-free status, this is subject to the limitations under paragraph 38-45(1)(b) of the GST Act. That is, merely being a product that is covered by Schedule 3 to the GST Act or the GST Regulations does not indicate or mean that the product is also specifically designed for people with an IOD and is not widely used by people without an IOD. If a product is listed, the GST-free exemption is subject to the satisfaction of the limitations under paragraph 38-45(1)(b) of the GST Act. The Commissioner's view on how the key elements under subsection 38-45(1) of the GST Act are interpreted can be found in Goods and Services Tax Determination GSTD 2021/ 2 Goods and services tax: adjustable xxxxs, pressure xxx and pressure management overlays

(GSTD 2021/2). Although GSTD 2021/2 is made in the context of adjustable xxxxs, pressure management xxx and pressure management overlays, the principles discussed are applicable to other products that may be considered for GST-free treatment under subsection 38-45(1) of the GST Act. [1] 'Specifically designed for' test Whether an item is 'specifically designed for' people with an 'IOD' is determined by application of the 'essential character' test. That is, by objectively considering the design features and characteristics of the product. [2] In the context of section 38-45 of the GST Act, '... the task ... is to determine the essential character of the goods, what essentially the goods are, not some characteristic that the goods might have'. [3]

Reference should be made to the designer's or manufacturer's intention of how the good is to be used and it's features. The intended use of the product is to be determined by objective consideration of all the evidence, including how it is marketed and by reference to the type of outlets through which the product is sold. Where there is no direct evidence of the designer's or manufacturer's design purpose, marketing material and other commercial information can be drawn on as a proxy indicator. The word 'specifically' in paragraph 38-45(1)(b) of the GST Act does not mean 'exclusively' or 'solely'. The Oxford Dictionary of English (3rd) defines 'specifically' as follows: adverb 1. in a way that is exact and clear; precisely: a workman called at the time I specifically stated I would not be in | the problem was specifically mentioned in the report | [sentence adverb]: censorship, or more specifically the banning of books, is a threat to the freedom of speech. for a particular purpose: books created specifically for children | some collectors maintain spaces specifically to house their larger works of art. The Macquarie Dictionary defines 'specific' as follows:

adjective 1. having a special application, bearing, or reference; specifying, explicit, or definite: specific mention . A thing that has (or is designed for) some special application does not necessarily deny that it may also have (or be designed for) some other incidental application. The question is whether the primary design focus or feature is for people with an IOD, as opposed to design features which are equally for and beneficial to people with and without an IOD. Paragraph 7 of GSTD 2021/2 provides: [4] Specifically designed 7. The following factors are a non-exhaustive list of matters you should take into account when considering whether a particular product is specifically designed for people with an illness or disability: •                    An objective view of the design features and characteristics of the product indicate whether its essential character is that it is specifically designed for people with an illness or disability.

•                    The designer's or manufacturer's intention of how the particular product is to be used. Indicators of the designer's or manufacturer's intention include an objective consideration of how the product is marketed and the type of outlets at which the product can be purchased. Based on the information provided, the essential character of Entity A's Medical Aids is to protect the xx from damage. The need for protection may arise from health-related conditions such as xx but can equally arise from non-medical causes such as xx and xx. We do not consider that the mere fact that the product is waterproof weighs toward a conclusion that it has a primary design focus or feature that is for people with an IOD. Rather, we consider that the design focus of the waterproof nature of the product is equally for, and beneficial to, people with and without an IOD.

The surface of each of the Medical Aids is composed of a different material or fabric. Notwithstanding any characteristics that relate to the specific material, we consider the material of each of these products is merely an incidental characteristic and is of lesser importance in determining whether the product is specifically designed for people with an IOD. The material does not change the fact that the Medical Aids are designed for a broad range of uses and does not have a primary design focus or special design feature for people with an IOD. The Medical Aids are sold via general retail xx and department stores, which is indicative of the wider design functions of the product for everyday use to protect the xx. Taken as a whole, the Waterproof medical aids are designed for a broad range of uses and weighs towards the product not having a primary design focus or special design feature for people with an IOD. The essential character of the Medical Aids are to prevent damage to the xxx from causes including, but not limited to, xx. We consider the Medical Aids are equally for and beneficial to people with and without an IOD.

Therefore, the Medical Aids not specifically designed for people with an IOD, failing the first test under paragraph 38-45(1)(b) of the GST Act. 'Not widely used by' test Whether an item is 'not widely used' by people without an IOD is a question of degree and judgment. Paragraphs 8 to 10 of GSTD 2021/2 provides: [5] Not widely used 8. The phrase 'not widely used' is not defined in the GST Act. It therefore takes its ordinary meaning, having regard to the context in which it appears. It is a question of degree whether a product is not widely used by people without an illness or disability. The Commissioner considers that it is reasonable to conclude that the test is not satisfied if the product is widely purchased by or on behalf of people without an illness or disability, without the need to examine how this class of people in fact use the product. 9. In the context of paragraph 38-45(1)(b), the Commissioner considers 'not widely used' to mean not used by many people who do not have an illness or disability. 10. The following factors will be relevant, but are not an exhaustive list, when considering whether a product is widely used by people without an illness or disability:

•                    The product is widely sold in retail or other outlets that predominantly sell standard xx (that is, xx that do not have features specifically designed for people with an illness or disability) to the general public. •                    The marketing material for the product emphasises how it enhances the lifestyle of people without an illness or disability. We have considered these factors above when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of the Entity A's Medical Aids and whether or not they are widely used by people without an IOD. Taken as a whole, the marketing materials for the Medical Aids generally does not expressly indicate that the product is intended to be used to manage xxx. The marketing material emphasises and promotes the features of the product as an everyday product, indicating a target market inclusive of the wider community. Accordingly, the marketing material weighs towards the product being widely used by people without an IOD, notwithstanding any implied benefits for people managing xx.

The Waterproof medical aid is sold under a variety of names and brands. The sale of Entity A's products more widely by general retail xxx and department stores indicates that the product may be purchased by people without an IOD. We consider that Entity A's Medical Aids are widely used by people without an IOD, failing the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, Entity A's supplies of the Medical Aids are not GST-free under subsection 38-45(1) of the GST Act, and therefore, these supplies are taxable. Question 2 We must determine whether the Waterproof Medical aids are: [6] (a)          listed in the table in Schedule 3 to the GST Act; (b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat their Waterproof Medical aids as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. However, before considering whether the Waterproof Medical aids meet these requirements, we must first determine which products are the supply of the same 'thing'. Are any of the products identical?

Under question 1, we outlined what we consider in determining whether the 'thing supplied' for the purposes of subsection 38-45(1) of the GST Act is the same thing. Based on the information provided, some of Entity A's Waterproof Medical aids are identical and are the supply of the same 'thing' for the purposes of subsection 38-45(1) of the GST Act. We must consider each product within that group together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied. Are the Waterproof Medical aids covered by Schedule 3? Item 16 lists 'waterproof covers or xxx. We consider that a waterproof Medical aids is covered by Item 16. Entity A's Medical aids are waterproof. Therefore, Entity A's products are a 'waterproof cover' for the purposes of Item 16, satisfying paragraph 38-45(1)(a) of the GST Act. 'Specifically designed for' test Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act.

The Waterproof Medical aids share several features and characteristics with the Medical Aids. The only feature or characteristic that functionally differentiates the Waterproof Medical aids from the Medical Aids is that the former is designed to protect Medical aids.As such, we consider the reasons discussed under question 1 in relation to these features and characteristics are equally applicable to the Waterproof Medical aids. We consider that the Waterproof Medical aids are designed for a broad range of uses, weighing towards the product not having a primary design focus or special design feature for people with an IOD. The essential character of the Waterproof Medical aids is to protect the Medical aids from damage caused by, but not limited to, xxxx. Relevantly, the need for protection may arise from health-related conditions but can equally arise from non-medical causes.

Taken as a whole, the marketing emphasises the general features of the product and its everyday use, which suggests the product is not specifically designed for people with an IOD. The retailing of the product via general retail xxx and department stores,, is indicative of the wider design functions of the product for everyday use to protect the Medical aids. Analogous to the reasons discussed under question 1 and above, we consider that the Waterproof Medical aids are not specifically designed for people with an IOD, failing the first test under paragraph 38-45(1)(b) of the GST Act. 'Not widely used' test Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. We have considered these factors above when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of the Waterproof Medical aids and whether or not the product is widely used by people with an IOD.

Taken as a whole, the marketing materials for the Waterproof Medical aids generally does not expressly indicate that the product is intended to be used to manage xxx. The marketing material emphasises and promotes the features of the product as an everyday product, indicating a target market inclusive of the wider community. Accordingly, the marketing material weighs towards the product being widely used by people without an IOD, notwithstanding any implied benefits for people managing xxx. The Waterproof Medical aids are sold under a variety of names and brands. The sale of Entity A's products more widely by general retail xxx and department stores indicates that the product may be purchased by people without an IOD. We consider that Entity A's Waterproof Medical aids are widely used by people without an IOD, failing the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, Entity A's supplies of the Waterproof Medical aids are not GST-free under subsection 38-45(1) of the GST Act, and therefore, these supplies are taxable. Question 3 We must determine whether the Medical aids are: [7] (a)          listed in the table in Schedule 3 to the GST Act;

(b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat their Medical aids as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. However, before considering whether the Medical aids meet these requirements, we must first determine which products are the supply of the same 'thing'. Are any of the products identical? Under question 1, we outlined what we consider in determining whether the 'thing supplied' for the purposes of subsection 38-45(1) of the GST Act is the same thing. Based on the information provided, some of Entity A's Medical aids are identical and are the supply of the same 'thing' for the purposes of subsection 38-45(1) of the GST Act. We must consider each product within that group together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied. Are the Medical aids covered by Schedule 3? Item 16 lists 'waterproof xx or Medical aids'. We consider that a waterproof Medical aid is covered by Item 16. Some of Entity A's Medical aids are waterproof.

Therefore, Entity A's Waterproof Medical aids are a 'waterproof xx' for the purposes of Item 16, satisfying paragraph 38-45(1)(a) of the GST Act. The Non-Waterproof Medical aids are not covered by Item 16, failing paragraph 38-45(1)(a) of the GST Act. As the Non-Waterproof Medical aids do not satisfy paragraph 38-45(1)(a) of the GST Act, it is not necessary to consider the tests under paragraph 38-45(1)(b) of the GST Act. 'Specifically designed for' test Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act. The Waterproof Medical aids share several features and characteristics with the Medical Aids. The only feature or characteristic that functionally differentiates the Waterproof Medical aids from the Medical Aids is that the former is designed to protect the Medical aids. As such, we consider the reasons discussed under question 1 in relation to these features and characteristics are equally applicable to the Waterproof Medical aids.

We consider that the Waterproof Medical aids are designed for a broad range of uses, weighing towards the product not having a primary design focus or special design feature for people with an IOD. The essential character of the Waterproof Medical aids is to protect the Medical aids or xx from damage caused by, but not limited to, xxx. Relevantly, the need for protection may arise from health-related conditions but can equally arise from non-medical causes. Taken as a whole, the marketing emphasises the general features of the product and its everyday use, which suggests the product is not specifically designed for people with an IOD. The retailing of the product via general retail xxx and department stores, is indicative of the wider design functions of the product for everyday use to protect the Medical aids. Analogous to the reasons discussed under question 1 and above, we consider that the Waterproof Medical aids are not specifically designed for people with an IOD, failing the first test under paragraph 38-45(1)(b) of the GST Act. 'Not widely used' test

Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. We have considered these factors above when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of the Waterproof Medical aids and whether or not the product is widely used by people with an IOD. Taken as a whole, the marketing materials for the Waterproof Medical aids generally does not expressly indicate that the product is intended to be used to manage xxx. The marketing material emphasises and promotes the features of the product as an everyday product, indicating a target market inclusive of the wider community. Accordingly, the marketing material weighs towards the product being widely used by people without an IOD, notwithstanding any implied benefits for people managing xxx. The marketing by Entity A's retailers more so emphasises the luxurious qualities of the product and how the can improve a person's sleep.

The Waterproof Medical aids is sold under a variety of names and brands. The sale of Entity A's products more widely by general retail xxx and department stores indicates that the product may be purchased by people without an IOD. We consider that Entity A's Medical aids are widely used by people without an IOD, failing the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, Entity A's supplies of the Waterproof Medical aids are not GST-free under subsection 38-45(1) of the GST Act, and therefore, these supplies are taxable. Question 4 We must determine whether the Waterproof xx are: [8] (a)          listed in the table in Schedule 3 to the GST Act; (b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat their Waterproof xx as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. However, before considering whether the Waterproof xx meet these requirements, we must first determine which products are the supply of the same 'thing'. Are any of the products identical?

Under question 1, we outlined what we consider in determining whether the 'thing supplied' for the purposes of subsection 38-45(1) of the GST Act is the same thing. Based on the information provided, some of Entity A's Waterproof xxx are identical and are the supply of the same 'thing' for the purposes of subsection 38-45(1) of the GST Act. We must consider each product within that group together to determine if the requirements under subsection 38-45(1) of the GST Act are satisfied. Are the Waterproof xxx covered by Schedule 3? Item 17 of Schedule 3 to the GST Act lists 'absorbent Medical aids for xxxxs and xx' (Item 17). Entity A's Waterproof xxx are designed to absorb liquids. Therefore, Entity A's Waterproof xxx are 'absorbent Medical aids for xxx' for the purposes of Item 17, satisfying paragraph 38-45(1)(a) of the GST Act. 'Specifically designed for' test Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act.

Based on the information provided, the Waterproof xxx have distinguishable characteristics and features which weigh towards the product being specifically designed for people with an IOD. These products are placed on a Medical aids for the purpose of soaking up liquid from xxx or xxx. If a person is xxxx the Waterproof xxx can be removed from the Medical aids without the need to change the xxxx. Although the Waterproof xxx also protects the xxx, the design focus is on absorbing and drawing liquid away from someone who is xxx. Overall, we consider that the Waterproof xxx is specifically designed for people with an IOD, particularly to manage xxx. The first test under paragraph 38-45(1)(b) has been satisfied. 'Not widely used' test Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. Based on the information provided, the Waterproof xxx are explicitly marketed as a product to manage xxx. Although the marketing of the Waterproof xxx mentions the use of the product for accidents and spills, the paramount focus of the marketing is on its use as an aid for xxx.

The products are primarily sold through health care channels or retail channels targeting people with health conditions. We are satisfied that the Waterproof xxx product is not widely used by people without an IOD, satisfying the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, the supplies of the Waterproof xxx are GST-free under subsection 38-45(1) of the GST Act. Question 5 We must determine whether Product A is: [9] (a)          listed in the table in Schedule 3 to the GST Act; (b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat Product A as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. Are the Waterproof xxx covered by Schedule 3? Item 16 lists 'waterproof covers or Medical aids'. We consider that Product A is covered by Item 16 as a 'waterproof cover'. Therefore, satisfying paragraph 38-45(1)(a) of the GST Act. 'Specifically designed for' test

Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act. Based on the information provided, Product A have distinguishable characteristics and features which weigh towards the product being specifically designed for people with an IOD. Product A is exclusively marketed and sold via health care channels. Overall, we consider that Product a is specifically designed for people with an IOD, particularly to manage xxx. The first test under paragraph 38-45(1)(b) has been satisfied. 'Not widely used' test Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. We have considered the marketing and retailing of Product A when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of Product A and whether or not the product is widely used by people with an IOD.

Based on the information provided, we are satisfied that Product A is not widely used by people without an IOD, satisfying the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, the supply of Product A is GST-free under subsection 38-45(1) of the GST Act. Question 6 We must determine whether the xxx Medical aids are: [10] (a)          listed in the table in Schedule 3 to the GST Act; (b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat their xxx Medical aids as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. Are the xxx Medical aids covered by Schedule 3? Item 17 of Schedule 3 to the GST Act lists 'absorbent Medical aids for xxx and xxx' (Item 17). Entity A's xxx Medical aids are designed to absorb xxx. Therefore, Entity A's xxx Medical aids are 'absorbent Medical aids for ... xxx' for the purposes of Item 17, satisfying paragraph 38-45(1)(a) of the GST Act. 'Specifically designed for' test

Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act. The xxx Medical aids have distinguishable characteristics and features which weigh towards the product being specifically designed for people with an IOD. This is further supported by how Entity A has branded and marketed the product, and the retail channels that the product is sold through. The xxx Medical aids are designed to be placed on a xxx with the specific intention to absorb xxx. Reusable absorbent xxx Medical aids are not ordinarily used by someone who does not require assistance with xxx. These products are placed on a xxx for the distinct purpose of soaking up xxx from xxx. Although the xxx Medical aids also protects the xx from xx and accidents, the design focus is on absorbing and drawing xxx away from someone who is xxx. The xxx Medical aids are solely sold through health care channels and not through a brand or retail channel that aims to attract a wider audience of individuals who may not have an IOD.

Therefore, we consider that the xxx Medical aids specifically designed for people with an IOD, satisfying the first test under paragraph 38-45(1)(b) of the GST Act. 'Not widely used' test Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. We have considered the marketing and retailing of the xxx Medical aids when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of the xxx Medical aids and whether or not the product is widely used by people with an IOD. Based on the information provided, we are satisfied that the xxx Medical aids are not widely used by people without an IOD, satisfying the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, the supplies of the xxx Medical aids are GST-free under subsection 38-45(1) of the GST Act. Question 7 We must determine whether the xxx Medical aids are: [11] (a)   listed in the table in Schedule 3 to the GST Act; (b)   specifically designed for people with an IOD; and

(c)   not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat their Xxxx Medical aids as taxable, therefore subsection 38-45(3) of the GST Act is not relevant. Are the xx Medical aids covered by Schedule 3? Item 17 of Schedule 3 to the GST Act lists 'absorbent Medical aids for xxxxs and xx' (Item 17). Entity A's Xxxx Medical aids are designed to absorb liquids. Therefore, Entity A's Xxxx Medical aids are 'absorbent Medical aids for xxxxs' for the purposes of Item 17, satisfying paragraph 38-45(1)(a) of the GST Act. 'Specifically designed for' test Under question 1, we set out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act. The Xxxx Medical aids have distinguishable characteristics and features which weigh towards the product being specifically designed for people with an IOD. This is further supported by how Entity A has branded and marketed the product, and the retail channels that the product is sold through.

The Xxxx Medical aids are designed to be placed on top of a xxxx with the specific intention to absorb xxx. Reusable absorbent xxxx Medical aids are not ordinarily used by someone who does not require assistance with xxx. These products are placed on a xxxx for the distinct purpose of soaking up xxx from xxx. If a person is xxx, the Xxxx Medical aids can be removed from the Medical aids without the need to change the xxx on the xxxx. Although the Xxxx Medical aids protect the xxxx, the design focus is on absorbing and drawing liquid away from someone who is xxx. The Xxxx Medical aids are solely sold through health care channels and not through a brand or retail channel that aims to attract a wider audience of individuals who may not have an IOD. Therefore, we consider that the Xxxx Medical aids specifically designed for people with an IOD, satisfying the first test under paragraph 38-45(1)(b) of the GST Act. 'Not widely used' test Under Question 1, we set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act.

We have considered the marketing and retailing of the Xxxx Medical aids when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of the Xxxx Medical aids and whether or not the product is widely used by people with an IOD. Based on the information provided, we are satisfied that the Xxxx Medical aids are not widely used by people without an IOD, satisfying the second test under paragraph 38-45(1)(b) of the GST Act. Conclusion Therefore, the supplies of the Xxxx Medical aids are GST-free under subsection 38-45(1) of the GST Act. Question 8 We must determine whether the xxx Packs are: [12] (a)          listed in the table in Schedule 3 to the GST Act; (b)          specifically designed for people with an IOD; and (c)          not widely used by people without an IOD. Entity A does not have any agreements with recipients of their supplies to treat the xxx Packs as taxable, therefore subsection 38-45(3) of the GST Act is not relevant.

Entity A sell xxx packs which contain a combination of two or more of their xxx products. These packs may consist of Medical aids, Medical aids, xxxx Medical aids and xxx Medical aids. Pursuant to the reasons in question 1 to 7, we have determined that the Medical Aids, Waterproof Medical aids and Medical aids are taxable, while the Waterproof xxx, xxx Medical aids and Xxxx Medical aids Medical aids are GST-free. Some of the xxx Packs includes these products. Some of the products in these packs have not been considered in question 1 to 7. Entity A is liable to pay GST to the extent that the supply is taxable. [13] Where a xxx pack contains taxable and GST-free products, it is necessary to characterise what is supplied to determine whether a particular provision applies in whole or in part. Furthermore, it needs to be determined whether each product in a pack is separately indefinable. Goods and Services Tax Ruling 2001/8 Goods and services tax: Apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) provides guidance on how we identify whether a supply includes a taxable and non-taxable (i.e., GST-free) part under the GST Act.

If a xxx pack is made up of products which have the same GST treatment (i.e., every product in the pack is either solely taxable or GST-free), it is not necessary to separately identify the parts of the supply or apportion any of the consideration. This is because all parts of the supply will either be taxable or GST-free. [14] If a xxx Pack includes items that are GST-free and taxable, it is necessary to determine whether the supply of the pack is a 'mixed supply' or 'composite supply'. [15] Paragraph 16 of GSTR 2001/8 explains that a mixed supply is, 'a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised'. Relevantly, GST is only payable on the taxable part of a mixed supply. Whether parts of a supply are separately identifiable and retain their own identity is a matter of fact and degree. [16]

Whereas paragraph 17 of GSTR 2001/8 explains that a composite supply is, 'a supply that contains a dominant part and includes something that is integral, ancillary or incidental to that part'. A composite supply is treated as a single supply made up of a dominant part with the other parts being integral, ancillary or incidental to the dominant part of the supply. If the dominant part of a composite supply is taxable, the whole supply is taxable. Paragraph 59 of GSTR 2001/8 lists some indicators to determine whether a part of a supply may be integral, ancillary or incidental to the dominant part of the supply, which include where: •                      you would reasonably conclude that it is a means of better enjoying the dominant thing supplied, rather than constituting for customers an aim in itself; or •                      it represents a marginal proportion of the total value of the package compared to the dominant part; or •                      it is necessary or contributes to the supply as a whole, but cannot be identified as the dominant part of the supply; or •                      it contributes to the proper performance of the contract to supply the dominant part.

These factors are not exhaustive and must be applied by having regard to all the circumstances and by taking a common sense and practical approach. By having regard to the essential character or features of the transaction, it can be ascertained whether a supply is a mixed supply or a composite supply. In differentiating between whether a supply is mixed or composite, the essential character of the supply should be considered. Xxx Kit 1 The essential character of the transaction is the supply of a pack of xxx products. The value of each product included in xxx Kit is not marginal and each product can be purchased on their own. Although the products are complementary to each other, each product can be used independently and does not require one of the other products to properly function. We consider that each item in xxx Kit 1 are separately identifiable and retain their own identity, and therefore, the supply of xxx Kit 1 is a mixed supply. As the supply of xxx Kit 1 is a mixed supply, Entity A must apportion the consideration for the supply to calculate the GST payable on the taxable part of the supply. Xxx Kit 2

Before determining whether the supply of xxx Kit 2 is mixed or composite supply, we must first determine whether the Product B is GST-free under subsection 38-45(1) of the GST Act. We consider that Product B is covered by Item 16 as it prevents xx from passing through the material. Therefore, satisfying paragraph 38-45(1)(a) of the GST Act. Under question 1, we have set sets out the Commissioner's understanding of the 'specifically designed for' test for the purposes of paragraph 38-45(1)(b) of the GST Act. Product B is placed over a xx, acting as a layer between them and any Medical aids or xxxx that may be used. The intention of the product is to absorb and prevent xx from xxx or xxx from penetrating through the material. If a person is xx, Product B can be removed from the Medical aids without the need to change the x, Medical aids Medical aids or xxxx. Product B is exclusively marketed and sold via health care channels. The marketing emphasises how the product is intended to be used to manage xxx. Overall, we consider that Product B is specifically designed for people with an IOD, satisfying the first test under paragraph 38-45(1)(b) of the GST Act.

Under question 1, we have set out the Commissioner's understanding of the 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. We have addressed how Product B is marketed and what outlets it is sold through above when addressing the first test under subsection 38-45(1)(b) of the GST Act. We consider the reasons above are relevant insofar as they can indicate the actual use of Product b and whether or not the product is widely used by people with an IOD. We consider that Product B is not widely used by people without an IOD, satisfying the second test under paragraph 38-45(1)(b) of the GST Act. As all components of this supply are GST-free, it is not necessary to separately identify the parts of the supply or apportion any of the consideration. Therefore, the supply of the xxx Kit 2 is GST-free under subsection 38-45(1) of the GST Act. Xxx Kit 3 to 5 Before determining whether the supplies of xxx Kits 3 to 5 are mixed or composite supply, we must first determine whether the components are GST-free under subsection 38-45(1) of the GST Act.

We consider that the waterproof Medical aids and Medical aids that form part of these kits are covered by Item 16 as the Medical aids and Medical aids are designed to prevent xx from passing through the material. Therefore, satisfying paragraph 38-45(1)(a) of the GST Act. Under question 1, we have set out the Commissioner's understanding of the 'specifically designed for' and 'not widely used' test for the purposes of paragraph 38-45(1)(b) of the GST Act. The waterproof Medical aids and Medical aids share characteristics and features, as well as marketing and retailing, with the products considered under questions 1 and 2. We consider these reasons are equally applicable. Analogous to the reasons discussed under question 1 and 2, we consider that the waterproof Medical aids and Medical aids in these kits are not specifically designed for people with an IOD and are widely used by people without an IOD. Therefore, failing both tests under paragraph 38-45(1)(b) of the GST Act.

As all components of xxx Kits 3 to 5 are taxable, it is not necessary to separately identify the parts of the supply or apportion any of the consideration. Therefore, GST is payable on the supplies of xxx kit 3 to 5. Conclusion Entity A's supply of the xxx Kit is a mixed supply. Entity A must apportion the consideration for the supply to calculate the GST payable on the taxable part of the supply. Entity A's supply of xxx Kit 2 is GST-free under subsection 38-45(1) of the GST Act. Entity A's supplies of xxx Kits 3 to 5 are not GST-free under subsection 38-45(1) of the GST Act and are taxable. > [1] See also Goods and Services Tax Industry Issues Pharmaceutical Health Forum Medical aid or appliance specifically designed for people with an illness or disability and Goods and Services Tax Industry Issues Pharmaceutical Health Forum Medical aid or appliance widely used by people without an illness or disability. [2] As considered in the sales tax case of Commissioner of Taxation of the Commonwealth of Australia v Thomson Australian Holdings Pty Ltd [1989] FCA 382 ( Thompson) at [4]. [3] Snugfit Australia Pty Ltd and Commissioner of Taxation

[2013] AATA 802 at [10] confirmed that the 'essential character' test from Thompson is equally applicable in the context of section 38-45 of the GST Act. [4] See also Goods and Services Tax Industry Issues Pharmaceutical Health Forum Medical aid or appliance specifically designed for people with an illness or disability. [5] See also Goods and Services Tax Industry Issues Pharmaceutical Health Forum Medical aid or appliance widely used by people without an illness or disability. [6] GST Act subsection 38-45(1). [7] GST Act subsection 38-45(1). [8] GST Act subsection 38-45(1). [9] GST Act subsection 38-45(1). [10] GST Act subsection 38-45(1). [11] GST Act subsection 38-45(1). [12] GST Act subsection 38-45(1). [13] See section 9-5 and subsection 9-30(1) of the GST Act [14] Paragraph 11 of GSTR 2001/8 provides, 'Where you make a supply that is identifiable as having more than one part and each part is taxable, you do not need to apportion the consideration for the supply. This is because GST is payable on the whole supply. Similarly, if all of the parts of a supply are identifiable as being non-taxable, GST is not payable on any part of the supply'. [15]

Paragraph 15 of GSTR 2001/8 provides that, '... the terms 'mixed supply' and 'composite supply' are not found in the GST Act. However, these terms are used to identify whether a supply has taxable and non-taxable components which, in turn, informs the extent to which a supply may be a taxable supply'. [16] See paragraph 45 of GSTR 2001/8.