GST and the supply of an orthopaedic stool (leg rest)

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 an orthopaedic stool (leg rest)?

No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies an orthopaedic stool (leg rest). The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a supplier of various medical aids and appliances including orthopaedic stools (leg rests). The particular orthopaedic stool (leg rest) in question fits under an orthopaedic chair and is used as an extension of the chair, or can be used as a stool.

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

Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance: • is covered by Schedule 3 to the GST Act (Schedule 3), or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations); and • is specifically designed for people with an illness or disability; and • is not widely used by people without an illness or disability.

Of relevance in this case is item 16 in the table in Schedule 3 to the Regulations which lists 'postural support seating'. Postural support seating as listed in Item 16 needs to be a specific type of seating possessing characteristics that satisfies both the description of the item and the use requirement of paragraph 38-45(1)(b) of the GST Act.

The phrase 'postural support seating' is not defined in the GST Act.

Generally, where a phrase is not defined in the relevant Act, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning. Where a phrase has a special or technical meaning, it is necessary to determine its meaning by reference to the industry to which that phrase relates ( Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222).

In consultation with the Health Industry, it is considered that for the purposes of Item 16 and to be a thing that is specifically designed for people with an illness or disability, 'postural support seating' should be: (i) Custom made to suit the particular persons anatomical shape in order to provide correct postural support; or (ii) Adjustable to such an extent that the product can be customised to the individual's body shape or size in order to provide correct postural support; or (iii) Incorporate several of the following design characteristics which will ensure the product provides the necessary postural support for people with an illness or disability: • adjustable height so as to attain correct seating position for the requirements of the individual; • adjustable back angle to enable proper support (other than simply reclining) and contain appropriately positioned/shaped back supports; • adjustable seat height and depth; • adjustable seat base angle; • adjustable shoulder and trunk supports; • side supports; • calf support; • footrests specifically designed for injured or disabled persons; • swing away arms or removable armrests; • wide arm rests; • integral push handles; • specifically designed to provide a correct sitting position that results in sitting firmly on the pelvic bones and that aligns and lifts the head, neck and back; • fitted with wheels, glides or a mobile base suitable for movement of disabled people; • locking brakes; • suitable hand grips for disabled people; • specific features to enable people with difficulties in rising to get in and out of the seating; and • pressure reducing cushions.

However, it is considered that an orthopaedic stool (leg rest) does not fall within that item.

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 an orthopaedic stool.