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Is the entity, a physiotherapist, making a GST-free supply under subsection 38-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies gym balls to a patient during the provision of a GST-free physiotherapy service?

No, the entity is not making a GST-free supply under subsection 38-10(3) of the GST Act when it supplies gym balls to a patient during the provision of a GST-free physiotherapy service. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a physiotherapist. The entity is supplying a physiotherapy service that is GST-free under subsection 38-10(1) of the GST Act.

During the GST-free physiotherapy service, the entity also supplies a patient with gym balls to be taken away and used at home without the supervision of the entity. The gym balls are supplied to assist the patient in recovering from their illness or disability.

The supply of gym balls is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Subsection 38-10(3) of the GST Act provides that a supply of goods is GST-free if: • it is made to a person in the course of supplying to that person a service which is GST-free under subsection 38-10(1) of the GST Act; and • it is made at the premises at which the service is supplied.

In this case, the gym balls are supplied during a consultation for the provision of GST-free physiotherapy services. Therefore, it must be determined whether the gym balls are supplied in the course of supplying the GST-free physiotherapy services.

It is considered that the phrase 'in the course of supplying to that person a service', in the context of subsection 38-10(3) of the GST Act, requires the goods to be supplied at the same point in time at which the GST-free physiotherapy services are supplied. In addition, the goods must be: • customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free physiotherapy service; or • necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.

In this case, the gym balls are supplied at the same point in time at which the GST-free physiotherapy services are supplied. Therefore, it must be determined whether the gym balls are either customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free physiotherapy service; or necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.

The gym balls are generally designed as an aid for people with particular health problems. They are not individually customised to treat the illness or disability of that particular patient exclusively.

The gym balls are given to the patient during the consultation to take away and use at home over a period of time. Although they may be useful as part of the patient's overall treatment, they are not used as an integral part of the patient's treatment required immediately during that specific consultation.

Therefore, it is considered that the supply of the gym balls is not made 'in the course of supplying a GST-free physiotherapy service' and as such, the supply of the gym balls is not GST-free under subsection 38-10(3) of the GST Act.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies gym balls, to a patient, during a GST-free physiotherapy service.