ATO Interpretative Decision

ATO ID 2003/953

Goods and Services Tax

GST and supply of multi-purpose compression socks
FOI status: may be released

This version is no longer current. Please follow this link to view the current version.

This ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019. This ATO ID continues to apply in relation to the remade Regulations.
A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this ATO ID is available.

This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

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 supplies multi-purpose compression socks?

Decision

Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies multi-purpose compression socks.

Facts

The entity is a supplier of medical aids and appliances. The entity supplies multi-purpose compression socks.

Multi-purpose compression socks are designed to provide gradual compression from the foot, upwards to knee height, to stimulate blood flow and eliminate swelling of legs and feet. Multi-purpose compression socks are of benefit to people with vein thrombosis, people with poor circulation such as diabetics and people who stand on their feet for long periods. The product can also be of benefit to aircraft travellers as a preventative measure against deep vein thrombosis (DVT).

Multi-purpose compression socks are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability.

There is no agreement between the entity and the recipient of the supply that the supply will not 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 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); and
•: is specifically designed for people with an illness or disability; and
•: is not widely used by people without an illness or disability.

Item 14 in the table in Schedule 3 to the GST Regulations lists 'compression garments'.

GST Pharmaceutical Health Forum - Issues Register - Attachment B - Schedule 3 - Medical aids or appliances (Regulation 38-45.01), describes compression garments as, 'Garments which exert sufficient pressure on the wearer to be of therapeutic benefit. Commonly used by lymphoedema and burn sufferers'.

Multi-purpose compression socks are designed to provide gradual compression from the foot, upwards to knee height. The compression applied by the socks stimulates blood flow and eliminates swelling of legs and feet. This benefits people with vein thrombosis, people with poor circulation such as diabetics and people who stand on their feet for long periods. The product can also be of benefit to aircraft travellers as a preventative measure against deep vein thrombosis (DVT). Therefore, the multi-purpose compression socks do exert sufficient pressure to be of therapeutic benefit to the wearer. The multi-purpose compression socks fall within the scope of compression garments and are covered by Item 14.

In addition, multi-purpose compression socks are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability. Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies multi-purpose compression socks.

Date of decision: 18 April 2003

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-45(1)
Schedule 3

A New Tax System (Goods and Services Tax) Regulations 1999
Schedule 3
Schedule 3 table item 14

Other References:
Commonwealth of Australia 2003. GST Pharmaceutical Health Forum - Issues Register - Attachment B - Schedule 3 - Medical aids or appliances (Regulation 38-45.01). Tax Office, viewed 18 April 2003, www.ato.gov.au

Keywords
Goods and services tax
GST free
GST health
Section 38-45 - medical aids & appliances

Siebel/TDMS Reference Number: 3533787

Business Line: Indirect Tax

Date of publication: 24 October 2003

ISSN: 1445-2782

history

	Date:	Version:
You are here	18 April 2003	Original statement
	15 November 2023	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).