Edited version of your private ruling

Authorisation Number: 1012445721146

Ruling

Subject: Is the supply of medical aides GST free

Issue

Is a supply of chiropractic tables by an Australian entity (you) to customers in Australia GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supply of chiropractic tables by you to customers in Australia is not GST-free. The supply of the chiropractic tables by you to customers in Australia is a taxable supply under section 9-5 of the GST Act.

Relevant facts

You are an Australian company which is registered for GST.

You manufacture and import ranges of chiropractic tables.

The chiropractic tables are used by medical areas such as physiotherapy, podiatry, general practice, osteopathy, medical clinics and hospitals to treat the patients. The chiropractic tables are also used by medical practitioners especially for treatment of back and spinal care.

The chiropractic tables are height adjustable (with use of a footswitch) and the head and foot sections are manually adjustable.

The chiropractic table has four manual drops:

· Cervical;

· Thoracic;

· Lumbar; and

· Pelvic

Each drop section can be individually tensioned on each side of the table. The table also has an adjustable height pelvic and head section. The head sections width can also be adjusted as well as tilted to assist the patient and practitioner. The table also has an adjustable height foot rest.

The foams density is one of comfort for the patient as well as height density to assist the practitioner.

The chiropractic tables are marketed to medical practitioners in their specific field of work and many have also been sold to the teaching establishment involved in the field such as universities.

Your understanding is that other companies producing and importing the same type of products are receiving the GST exemption in particular the chiropractic tables and neurological tables which are used in the treatment of brain injuries and in the rehabilitation from other injuries.

You sell X% of your products to other medical distributors who on sell to the various allied health and medical areas.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Section 38-45

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)

A New Tax System (Goods and Services Tax) Act 1999 Schedule 3

A New Tax System (Goods and Services Tax) Regulations1999

Reasons for decision

GST is payable on a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *registered, or required to be registered.

However, the supply is not a taxable supply to the extent that it is *GST-free or *input taxed.

(* denotes a defined term in section 195-1 of the GST Act)

From the facts provided, you satisfy the requirements of paragraph 9-5(a) to 9-5(d) of the GST Act as follows:

· you supply the chiropractic tables for consideration; and

· the supply is in the course or furtherance of an enterprise carried on by you,

· the supply is connected with Australia( as the chiropractic tables are made available in Australia); and

· you are registered for GST.

However, the supply of the chiropractic tables is not a taxable supply to the extent that it is GST-free or input taxed.

There are no provisions in the GST Act under which your supply of chiropractic tables to the customers in Australia would be input taxed.

Therefore, what remains to be determined is whether your supply of the chiropractic tables will be GST-free.

GST-free supply

Division 38 of the GST Act sets out the supplies that are GST-free. Medical aids and appliances are covered by section 38-45 of the GST Act, which 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.

(2) A supply is GST-free if the thing supplied is supplied as a spare part for, and is specifically designed as a spare part for, another thing the supply of which would be GST-free under subsection (1).

(3) However, a supply is not GST-free under subsection (1) or (2) if the supplier and the *recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

(* denotes a defined term in section 195-1 of the GST Act)

Schedule 3 to the GST Act and the GST Regulations contain a list of medical aids and appliances which are generally used by people with various illnesses or disabilities. However, Schedule 3 to the GST Act and the GST Regulations do not operate in isolation to make the listed items GST-free. The supply of any item listed in Schedule 3 to the GST Act or the GST Regulations as medical aids or appliances must also satisfy all of the requirements in subsection 38-45(1) of the GST Act in order for that supply to be GST-free, i.e. the medical aid or appliance must be specifically designed for people with an illness or disability and must not be widely used by people without an illness or disability.

Additionally, subsection 38-45(3) of the GST Act states that a supply of a medical aid or appliance is not GST-free if the supplier and the recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as a GST-free supply.

Schedule 3 to the GST Act, or the GST Regulations

Schedule 3 to the GST Act lists a number of medical aids or appliances under various categories. One such category is:

Mobility of people with disabilities - physical: bedding for people with disabilities and two of the nine items listed under that category are:

59. manually operated adjustable beds

60. electronically operated adjustable beds

Section 182-15 of the GST Act provides that a category heading in Schedule 3 is not an operative part of the GST Act but may be used, per subsection 182-10(2) of the GST Act either to confirm a provision's meaning is the ordinary meaning conveyed by its text (taking into account its context and the purpose or object underlying the provision) or determine a provision's meaning if the provision is ambiguous or obscure.

The term 'bed', is not defined with the GST Act, therefore will take its ordinary meaning.

The following definitions are taken from the Macquarie Dictionary (Third Edition):

Bed is defined as 'a piece of furniture upon which or within which a person sleeps,..',

Generally a bed is a standard size/width designed and intended primarily for sleep.

The relevant category heading in Schedule 3 (i.e. 'mobility of people with disabilities - physical: bedding for people with disabilities') provides some guidance in interpreting item 60 - 'electronically operated adjustable beds'.

The opening words used in the category heading (i.e. 'mobility of people with disabilities - physical') indicate that the nine medical aids or appliances listed under that category should have design features which assist with the mobility of people who have a physical disability.

The category heading then refers to 'bedding for people with disabilities'. We note that there are seven other category headings in Schedule 3 which begin with 'mobility of people with disabilities - physical' and then refer to various classes of medical aids or appliances which assist with the mobility of people with physical disabilities such as 'physical seating aids', 'physical walking aids', 'wheelchairs and accessories' etc. The nine medical aids and appliances listed under the category heading include three types of bed (manually operated adjustable, electronically operated adjustable and hospital-type) plus six items which form part of or are used in conjunction with a bed. This suggests that 'bedding' is intended to include a bed and an item which forms part of or is used in conjunction with a bed.

Based on the facts provided, the chiropractic tables in comparison are generally smaller in size and narrower in width to a bed. The chiropractic tables are designed to enable medical staff to get closer to a patient for treatment of back and spinal care. The chiropractic tables are primarily intended for use by medical areas such as physiotherapy, podiatry, general practice, osteopathy, medical clinics and hospitals to treat the patients. Therefore, we consider that the chiropractic tables will not meet the intended meaning of items 59 or 60 of Schedule 3 of the GST Act.

Accordingly, the chiropractic tables cannot be classified as a GST-free medical aid and appliance in accordance with subsection 38-45(1) of the GST Act and is not GST-free under subsection 38-45(1) of the GST Act

Furthermore, the supply of chiropractic tables by you to customers in Australia does not satisfy any other GST-free provisions.

Therefore, the supply of chiropractic tables by you to customers in Australia is a taxable supply under section 9-5 of the GST Act and you will be liable for GST on the supply or importation of them.