GST and Foot Orthoses

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?

Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it sells foot orthoses.

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.

Under subsection 38-45(1) of the GST Act, a supply of a medical aid and appliance is GST-free if: • 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 • it is specifically designed for people with an illness or disability and • 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. [NOTE: Once an item meets all of the requirements of subsection 38-45(1) of the GST Act, its supply is GST-free all the way down the supply chain and not only when supplied to a person who has an illness or disability].

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 .

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 .