ATO Interpretative Decision
ATO ID 2001/273
Goods and Services Tax
GST and Foot OrthosesFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 sells foot orthoses?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it sells foot orthoses.
Facts
The entity is a supplier of medical aids and appliances. In this case, the entity is selling foot orthoses. The entity is registered for goods and services tax (GST).
The orthosis in question is described as a 'proprio receptive arch' and is designed to support an injured foot. This orthosis is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability.
There is no agreement between the entity and the recipient that the supply will not be treated as a GST-free supply.
Reasons for Decision
Under subsection 38-45(1) of the GST Act, a supply of a medical aid and appliance is GST-free if:
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- it is covered by Schedule 3 to the GST Act (Schedule 3) or specified in the A New Tax System (Goods and Services Tax) Regulations 2019(Regulations); and
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- it 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.
The category of medical aids and appliances from Schedule 3 that is of particular relevance to this case is 'footwear for people with disabilities'. Within this category, item 42 in the table in Schedule 3 (Item 42) lists orthotics.
Orthotics is not defined in the GST Act and is therefore given its ordinary meaning. The Macquarie Dictionary (1997) defines 'orthotic' as the adjectival form of the word orthosis. Orthosis is defined as a device applied to the body to modify position or motion, as a supporting collar, plaster cast, and so on.
The category heading 'footwear for people with disabilities' provides guidance as to the meaning of 'orthotics' for the purposes of Schedule 3. Although the category heading is not an operative part of Schedule 3 (section 182-15 of the GST Act and Note 2 in Schedule 3), it does confirm, in accordance with paragraph 182-10(2)(b) of the GST Act, that orthotics, for the purposes of Item 42, is restricted to devices which are designed to be used or applied as an orthosis for the foot to change or alter position or motion or prevent movement.
In this case, the orthosis is a 'proprio receptive arch' that is designed to provide support to a particular part of an injured foot in order to position or prevent movement so as to prevent any further injury. The orthosis in question therefore falls within the interpretation of orthotics for the purposes of Item 42.
Therefore, as the foot orthoses fall within the scope of Schedule 3 and are specifically designed for people with an illness or disability, and are not widely used by people without an illness or disability, their supply is GST-free under subsection 38-45(1) of the GST Act.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 9 April 2019 | Throughout | Updated A New Tax System (Goods and Services Tax) Regulations 1999 to A New Tax System (Goods and Services Tax) Regulations 2019. |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 38-45(1)
section 182-15
paragraph 182-10(2)(b)
Schedule 3 table item 42
Schedule 3 Note 2
The Regulations
Other References:
The Macquarie Dictionary 1997, 3rd edition, The Macquarie Library Pty Ltd, New South Wales.
Keywords
Goods & services tax
GST free
GST health
Medical aids & appliances
ISSN: 1445-2782