Edited version of your written advice

Authorisation Number: 1013061204881

Date of advice: 5 August 2016

Ruling

Subject: Whether a particular chair is a non-taxable importation

Question 1

Is the importation of a particular chair (Chair) by you, a non-taxable importation under section 13-10 of the A New Tax System (Goods and Services) Act 1999 (GST Act)?

Answer

Yes, the importation of the Chair by you is a non-taxable importation under section 13-10 of the GST Act.

According to section 13-10 of the GST Act, an importation is a non-taxable importation if:

• it is a non-taxable importation under Part 3-2; or

• it would have been a supply that was GST-free or input taxed it if had been a supply.

Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free if:

(a) it is covered by an item in Schedule 3 or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations);

(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.

ATO Interpretative Decision ATO ID 2001/364 Goods and services tax - GST and the supply of an orthopaedic chair (ATO ID 2001/364) provides that to satisfy the description in Item 16 (postural support seating) of Schedule 3 to the GST Regulations (Item 16) and be considered to be specifically designed for people with an illness or disability, the postural support seating should meet certain criteria. Several of the characteristics listed under the third point in ATO ID 2001/364 are incorporated into the design of the Chair. As such, the Chair is covered by Item 16 and is specifically designed for people with an illness or disability.

Additionally, the Chair is only available through specialist stores of ergonomic, health and wellness and rehabilitation products and as such, we accept that the Chair is not widely used by people without an illness or disability.

As the Chair is covered by Item 16 of the GST Regulations and is specifically designed for people with an illness or disability and is not widely used by people without illness or disability, the supply of the Chair would be GST-free under subsection 38-45(1) of the GST Act. Therefore, your importation of the Chair is a non-taxable importation as it would be a GST-free supply had it been a supply.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are registered for GST.

You are an importer and wholesaler of specialist ergonomic and health products.

You have a retail division with specialist stores in several Australian cities.

You sell several models of recliner chairs.

You have previously requested and received a favourable private ruling for an earlier model of the Chair. This earlier model has been discontinued by the manufacturer and replaced with the Chair. The Chair is substantially the same as the discontinued model, with only small changes to the chair leather shape, stitching, arm length and control buttons.

The brochure for the Chair states that it has:

• wide and long armrests;

• a five-way thumb operated controller that allows the user to adjust recline angle and leg elevation; and

• a battery safety feature that will restore the chair back to the upright position in case of a power outage .

In the brochure, a photograph of the Chair shows that a user's calves are supported.

The user manual for the Chair states that:

• the headrest is adjustable,

• the lumbar support is adjustable, and

• the footrest is adjustable.

The Chair is ergonomically designed to allow the spine to rest in zero gravity or neutral position while reclined, and provides relief to people with disabilities.

A press release by the manufacturer of the Chair states that the Chair and earlier model chairs have been endorsed by a major chiropractic body which has concluded that they can serve as an important tool for back pain sufferers by alleviating and preventing spinal stress, which is a leading cause of back pain and related disability and are particularly ideal for assisting in back pain, spinal alignment, and posture.

The Chair is only available through specialist stores of ergonomic, health and wellness and rehabilitation products. These stores have staff members who are trained professionals in either ergonomic, physio or occupational therapy and who network closely with health professionals in their local markets.

You do not do direct consumer advertising apart from your websites and the other stores' websites. Health professionals become familiar with the specialist stores that you work with and recommend clients to the stores or may visit the stores with their clients to educate and make the clients aware of the products available to help them.

Your retail division is an approved private health fund product provider and is linked closely to various health practitioners who recommend your products.

Relevant legislative provisions

A New Tax System (Goods and Services) Act 1999 section 13-5

A New Tax System (Goods and Services) Act 1999 section 13-10

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

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