ATO Interpretative Decision
ATO ID 2002/38
Goods and Services Tax
GST and lumbar rollsFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a lumbar roll?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a lumbar roll.
Facts
The entity is a supplier of medical aids and appliances. The entity supplies a lumbar roll.
A lumbar roll is a cylindrical cushion that has been manufactured from a special supportive foam and designed to assist with the support or positioning of the lower back area of an individual with a disability, while seated or reclined.
In this case, the lumbar roll is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability.
The entity is registered for goods and services tax (GST). There is no agreement between the entity and the recipient to treat the supply as not a GST-free supply.
Reasons for Decision
Under subsection 38-45(1) of the GST Act, the supply of a medical aid and appliance is GST-free where the medical aid or appliance:
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- 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(GST Regulations);
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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 87 of Schedule 3 (Item 87) lists 'cushions specifically designed for people with disabilities'. The phrase 'cushions specifically designed for people with disabilities' is not defined in the GST Act.
Generally, where a word or phrase is not defined, it is usually interpreted in accordance with its ordinary meaning unless it has a special or technical meaning. Where a word or phrase has a special or technical meaning, it is necessary to determine the meaning by reference to the industry to which that word or phrase relates (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).
For the purposes of Item 87, the ordinary meaning of the phrase 'cushions specifically designed for people with disabilities' is interpreted to mean cushions with a specifically designed character or function that have been made, or adapted, for the purposes of:
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- assisting with the support, or positioning, of an individual with a disability; or
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- preventing or alleviating conditions associated with that disability.
In this case, the lumbar roll is a cylindrical cushion that has been manufactured from a special supportive foam and designed to assist with the support or positioning of the lower back area of an individual with a disability, in a seated or reclined position.
Therefore, the lumbar roll falls within the interpreted meaning of 'cushions specifically designed for people with disabilities' for the purposes of Item 87. The lumbar roll is specifically designed for people with an illness or disability, and 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 a lumbar roll.
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)
Schedule 3
Schedule 3 table item 87
The Regulations
Case References:
Herbert Adams Pty Ltd v FCT
(1932) 47 CLR 222
Keywords
Goods & services tax
GST free
GST health
Section 38-45 - medical aids & appliances
ISSN: 1445-2782