GST and lumbar support devices supplied during a GST-free physiotherapy service

Is the entity, a physiotherapist, making a GST-free supply under Subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a lumbar support device to a patient during the provision of a GST-free physiotherapy service?

No, the entity is not making a GST-free supply under Subdivision 38-B of the GST Act when it supplies a lumbar support device 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 provision of a GST-free physiotherapy service, the entity also supplies a patient with a lumbar support device. The device is a generic device, which is attached to the lumbar to provide comfort and support to that particular region. The device is to be taken away and used at home to assist the patient in recovering from their illness or disability. The device is not designed to change or alter position, or prevent movement of the lumbar region.

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.

Subdivision 38-B of the GST Act sets out the kinds of supplies relating to the health industry that are GST-free.

Under subsection 38-45(1) of the GST Act, the supply of a medical aid and appliance 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 (GST Regulations); and • is specifically designed for people with an illness or disability; and • is not widely used by people without an illness or disability.

Item 68 of Schedule 3 (Item 68) lists 'spinal orthoses'. The term spinal orthoses is not defined in the GST Act. Therefore, it is necessary to determine what a spinal orthoses is with reference to its ordinary meaning.

The Macquarie Dictionary (1997) defines 'orthoses' as 'a device applied to the body to modify position or motion, as a supporting collar, plaster cast etc'.

Furthermore, the Stedman's Medical Dictionary (1999) defines 'orthoses' as 'an external orthopaedic appliance, as a brace or splint, that prevents or assists movement of the spine or the limbs'.

As such, it is considered that an item is an orthoses where it is a device that is designed to be applied to the body to change or alter position or motion, or prevent movement, of the spine or limbs.

The Macquarie Dictionary (1997) defines 'spinal' to mean 'of relating, or belonging to any spine or thornlike structure, especially the backbone'.

The Macquarie Dictionary (1997) defines 'spine' to mean '1. The vertebral or spinal column; the backbone'.

Therefore, it is considered that an item is a spinal orthoses where it is designed to be applied to the body to change or alter position or motion, or prevent movement, of the vertebral or spinal column.

In this case, the lumbar device is designed to merely provide comfort and support to the lumbar region. It is not designed to be applied to the body to change or alter position or motion, or prevent movement of the vertebral or spinal column. As the lumbar support device is not covered by any other items in Schedule 3, the supply of the lumbar support device is not GST-free under subsection 38-45(1) 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 lumbar support device is supplied during the provision of an otherwise GST-free physiotherapy service. Therefore, it must be determined whether the lumbar support device is supplied in the course of supplying the GST-free physiotherapy service.

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 lumbar support device is supplied at the same point in time at which the GST-free physiotherapy service is supplied. Therefore, it must be determined whether the lumbar support device is 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 lumbar support device is designed as an aid for people with particular back problems. They are not individually customised to treat the illness or disability of that particular patient exclusively.

The lumbar support device is 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 lumbar support device is not made 'in the course of supplying a GST-free physiotherapy service' and as such, the supply of the lumbar support device is not GST-free under subsection 38-10(3) of the GST Act.

As the supply is neither GST-free under subsection 38-45(1) of the GST Act nor GST-free under subsection 38-10(3) of the GST Act, the supply is not GST-free under Subdivision 38-B 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 any other provisions in 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 a lumbar support device to a patient during a GST-free physiotherapy service.