GST and weight management kit

Is the entity, a dietician, 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 a weight management kit to a patient during a GST-free health service?

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

The entity is a dietician. The entity supplies a dietary service to a patient. The supply of the service is GST-free under subsection 38-10(1) of the GST Act.

During the GST-free health service, the entity also supplies a patient with a weight management kit that is to be taken away and used at home. This weight management kit is a standard kit that is supplied to assist the patient in managing their weight loss.

The weight management kit provides the basis of the treatment regime that is to be followed over several weeks and contains educational information, guidelines and action plans for the patient. For the duration of the program, the patient uses the weight management kit and is required to return to the entity on a weekly basis. Medical reviews, checks and management are an integral part of the program.

The weight management kit is not a GST-free 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 (other than a service of either herbal medicine, naturopathy, optometry or pharmacy), and • it is made at the premises at which the service is supplied.

The entity's supply of dietary services is a GST-free supply under subsection 38-10(1) of the GST Act and is not the provision of an excluded service as listed under subsection 38-10(3) of the GST Act.

In the context of subsection 38-10(3) of the GST Act, the phrase 'in the course of supplying to that person a service', requires the goods to be supplied at the same point in time at which the GST-free health 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 health service, or • necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.

While the weight management kit is supplied at the same point in time at which the GST-free health service is supplied, it is a standard kit that is designed as an aid for people with particular health problems and as such, it is not individually customised to treat the illness or disability of that particular patient exclusively.

The weight management kit is given to the patient during the consultation to take away and use at home over a period of time. Although it may be useful as part of the patient's overall treatment, it is not used as an integral part of the patient's treatment and is not required immediately during that specific consultation but rather forms the basis for a treatment regime that is carried out over a period of time. As such, the supply of the weight management kit is not made 'in the course of supplying' a GST-free health service.

Therefore, as the supply of the weight management kit is not made 'in the course of supplying' the GST-free health service and it does not satisfy subsection 38-10(3) of the GST Act, the entity is not making a GST-free supply under subsection 38-10(3) of the GST Act when it supplies the weight management kit.

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 provision of 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 weight management kit to a patient during a GST-free health service.