Issue
Is the entity, a supplier of footwear 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 modified footwear, being general purpose orthopaedic footwear that has been modified to support and correct a person's deformed foot?
Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies modified footwear, being general purpose orthopaedic footwear that has been modified to support and correct the person's deformed foot.
Facts
The entity is a supplier of footwear. The entity supplies general purpose orthopaedic footwear that it has modified so that the shoes provide support and correct a person's deformed foot.
Modifications to the footwear are done by using build ups, sole and heel flares and adding calliper sockets or braces.
The modified footwear is specifically designed to correct and support the person's deformed foot. Footwear that has been modified in this manner is not widely used by people without disabilities.
There is no agreement between the entity and the recipient of supply that the supply will not be treated as a GST-free supply.
The entity is registered for goods and services tax (GST).
Reasons for Decision
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 in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST Regulations) • is specifically designed for people with an illness or disability, and • is not widely used by people without an illness or disability.
Item 41 in the table in Schedule 3 (Item 41) lists 'surgical shoes, boots, braces and irons'. The phrase 'surgical shoes, boots, braces and irons' is not defined in the GST Act. The Macquarie Dictionary (1997), 3RD edition, The Macquarie Library Pty Ltd, New South Wales, defines surgical as 'relating to or involving surgery' and surgical boot as 'a specially constructed boot or shoe designed to support or correct a deformed foot'.
Accordingly, 'surgical shoes and boots' are shoes or boots designed to support or correct a deformed foot or leg or those designed to be worn to support or protect a foot as a result of surgery. This includes fully customised medical grade shoes and boots.
A surgical shoe does not include shoes that are designed merely for comfort or for wearers who have extra long, extra wide, extra high or injured feet, even if the shoes are custom made or modified. Neither will it include shoes which are merely designed or worn to correct stance or posture.
The entity supplies general purpose orthopaedic footwear that has been modified to support and correct a person's deformed foot. Therefore, the modified footwear is covered by Item 41.
The modified footwear is specifically designed for the person's foot and is therefore, specifically designed for people with a disability. The modified footwear is not widely used by people without a disability.
Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies general purpose orthopaedic footwear that has been modified to support and correct the person's deformed foot.
Amendment History
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 .