ATO Interpretative Decision
ATO ID 2001/364
Goods and Services Tax
GST and the supply of an orthopaedic chairFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 an orthopaedic chair?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies an orthopaedic chair.
Facts
The entity is a supplier of various medical aids and appliances including orthopaedic chairs. The orthopaedic chair in this case can be adjusted to suit a person with an illness or disability. It has the following design characteristics:
- •
- adjustable height so as to attain correct seating position for the requirements of the individual;
- •
- adjustable back angle to enable proper support and contain appropriately positioned back supports;
- •
- adjustable seat height, depth and base angle;
- •
- footrests specifically designed for disabled persons;
- •
- wide arm rests that swing away and are removable; and
- •
- special features to enable people with difficulties in rising to get in and out of the seating.
There is no agreement between the entity and the recipient 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 certain medical aids and appliances 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 (Regulations); and
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- is specifically designed for people with an illness or disability; and
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- is not widely used by people without an illness or disability.
Item 16 in the table in Schedule 3 to the Regulations (Item 16) specifies 'postural support seating'. Postural support seating as listed in Item 16 needs to be a specific type of seating possessing characteristics that satisfies both the description of the item and the use requirement of paragraph 38-45(1)(b) of the GST Act.
The phrase 'postural support seating' is not defined in the GST Act.
Generally, where a phrase is not defined in the relevant Act, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning. Where a phrase has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that phrase relates (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).
In consultation with the Health Industry, it is considered that for the purposes of Item 16 and to be a thing that is specifically designed for people with an illness or disability, 'postural support seating' should be:
- (i)
- Custom made to suit the particular persons anatomical shape in order to provide correct postural support; or
- (ii)
- Adjustable to such an extent that the product can be customised to the individual's body shape or size in order to provide correct postural support; or
- (iii)
- Incorporate several of the following design characteristics which will ensure the product provides the necessary postural support for people with an illness or disability:
- •
- adjustable height so as to attain correct seating position for the requirements of the individual;
- •
- adjustable back angle to enable proper support (other than simply reclining) and contain appropriately positioned/shaped back supports;
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- adjustable seat height and depth;
- •
- adjustable seat base angle;
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- adjustable shoulder and trunk supports;
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- side supports;
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- calf support;
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- footrests specifically designed for injured or disabled persons;
- •
- swing away arms or removable armrests;
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- wide arm rests;
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- integral push handles;
- •
- specifically designed to provide a correct sitting position that results in sitting firmly on the pelvic bones and that aligns and lifts the head, neck and back;
- •
- fitted with wheels, glides or a mobile base suitable for movement of disabled people;
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- locking brakes;
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- suitable hand grips for disabled people;
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- specific features to enable people with difficulties in rising to get in and out of the seating; and
- •
- pressure reducing cushions.
In this case, the orthopaedic chair contains several of the characteristics from element (iii) above.
As such, the orthopaedic chair is covered by Item 16 and is specifically designed for people with an illness or disability. In addition, it is 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 the orthopaedic chair.
Date of decision: 23 July 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-45(1)
paragraph 38-45(1)(b)
Schedule 3
Schedule 3 table item 16
Case References:
Herbert Adams Pty Ltd v FCT
(1932) 47 CLR 222
ATO ID 2001/365
Keywords
Goods and Services tax
GST-free
GST health
Medical aids & appliances
ISSN: 1445-2782
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