GST - medical aids and appliances

Is the supply by You of five different models of XX chairs (collectively, XX chairs) GST-free supplies of medical aids and appliances under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Yes. The five XX chairs mentioned above are GST-free supplies of medical aids and appliances under subsection 38-45(1) of the GST Act. This ruling applies for the following period: 1 January 20YY to 30 December 20YY The scheme commenced on: 1 January 20YY

You are registered for GST. As part of your business activities, you supply five different models of XX chairs. The XX chairs are marketed primarily to individuals with medical conditions and disabilities, offering non-invasive therapeutic support for: •                     Sciatica and postural misalignment •                     Chronic pain (back, neck, joints) •                     Arthritis and mobility limitations •                     Poor blood circulation and fatigue •                     Neuromuscular conditions •                     Rehabilitation and recovery from injury •                     Diabetes; and •                     Other long-term illnesses or disabilities requiring ongoing physical therapy or comfort support. You are not the direct manufacturer of the XX chairs. They are manufactured by two of the world's leading certified manufacturers (collectively, manufacturers) of therapeutic XX chairs and medical wellness equipment. You work closely with the manufacturers to ensure selected models are specifically tailored for therapeutic use by individuals with medical conditions and disabilities. The manufacturers' intended end-users include:

•                     People living with chronic pain, including lower back pain, sciatica, and neck and shoulder tension •                     Individuals with postural dysfunction or spinal compression •                     Those with limited mobility, recovering from injuries, surgery, or neuromuscular impairments •                     Elderly users or those with age-related musculoskeletal issues •                     People with circulatory problems, diabetes-related neuropathy, or joint stiffness •                     Patients undergoing daily therapy at home under guidance from healthcare professionals The XX chairs are developed with the intention to reduce dependence on medication, support rehabilitation outcomes, and enhance mobility and comfort in daily life. The manufacturers incorporate clinically informed design features such as: •                     Spinal decompression and stretching mechanisms to aid postural correction •                     Twin leg systems and multi-zone XX coverage to promote joint mobility and muscle stimulation •                     AI Health Scanners to detect physical tension and automatically tailor therapeutic programs

•                     Foot and calf XX systems targeting reflexology points for systemic pain relief and improved circulation These systems go beyond relaxation-they are engineered to replicate the effects of physiotherapy techniques such as Shiatsu, kneading, PNF stretch therapy, and lymphatic stimulation. Marketing You primarily promote your products through: •                     In-store consultations - Each customer receives a personalised demonstration based on their reported symptoms, pain level, and mobility needs. •                     In-home demonstrations - Offered to elderly or mobility-limited customers to help determine suitability before purchase. •                     Word-of-mouth referrals - Many of your clients come through recommendations by previous customers or healthcare practitioners. •                     Signage outside your store All sales are conducted directly by your company, either through your official showroom location, website, or via in-person consultations. There are no external brands or resellers offering your XX chairs under any other name as your products are exclusively manufactured for you.

Your customers frequently seek or receive professional advice from healthcare practitioners in such as: •                     Occupational Therapists (OTs) •                     Physiotherapists •                     Chiropractors Many of your customers consult with these professionals before or during the purchase process, either independently or based on referral, to assist them in determining which product is most suitable to their medical needs.

A New Tax System (Goods and Services Tax) Act 1999 - section 9-5. A New Tax System (Goods and Services Tax) Act 1999 - section 38-45.

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you make a taxable supply if: (a)            You make a supply for consideration; and (b)            The supply is made in the course or furtherance of an enterprise that you carry on; and (c)            The supply is connected with the indirect tax zone (Australia); and (d)            You are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. For your supply of the Xx chairs to be a taxable supply, all the requirements listed in section 9-5 of the GST Act must be satisfied. In this case, you supply the XX chairs for consideration, the supply is made in the course of your enterprise, the supply is made in Australia, and you are registered for GST. Therefore, your supply of the XX chairs meets the requirements listed in paragraphs 9-5(a) to 9-5(d) of the GST Act. There are no provisions in the GST Act that will make your supply of XX chairs input taxed. As such, we must consider whether your supply of the XX chairs is GST-free under Division 38 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 meets both the following requirements: a)            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 (GST Regulations), and b)            is specifically designed for people with an illness or disability and is not widely used by people without an illness or disability. Paragraph 38-45(1)(a) of the GST Act Item 86 in the table in Schedule 3 (Item 86) lists 'electrically operated therapeutic lounge/recliner chairs specifically designed for people with disabilities'. Your XX chairs are electrically operated therapeutic recliner chairs and will meet the requirement of item 86 if the XX chairs are specifically designed for people with disabilities. Paragraph 38-45(1)(b) of the GST Act With regards to the requirement in paragraph 38-45(1)(b), the products are only GST-free if they are: •                     specifically designed for people with an illness or disability and •                     not widely used by people without an illness or disability.

The Commissioner's view on how the key elements under subsection 38-45(1) of the GST Act are interpreted can be found in Goods and Services Tax Determination GSTD 2021/2 Goods and services tax: adjustable beds, pressure mattresses and pressure management overlays (GSTD 2021/2). Although GSTD 2021/2 is made in the context of bedding products for people with disabilities, the principles discussed are equally applicable to any product that would be considered for GST-free treatment under subsection 38-45(1) of the GST Act.

Paragraph 3 in GSTD 2021/2 provides that in determining if a supply is GST-free involves applying an essential character test to examine its basic nature, taking its composition, function and other factors into account. The footnote to paragraph 3 (Footnote 3) explains that in the context of section 38-45 of the GST Act, '... the task ... is to determine the essential character of the goods, what essentially the goods are, not some characteristic that the goods might have'. The intended use of the product is to be determined by objective consideration of all the evidence, including how it is marketed and by reference to the type of outlets through which the product is sold. The question here is, is there a design focus on people with an illness or disability or some special design feature for people with an illness or disability? Paragraph 7 of GSTD 2021/2 states: Specifically designed 7. The following factors are a non-exhaustive list of matters you should take into account when considering whether a particular product is specifically designed for people with an illness or disability:

•                    An objective view of the design features and characteristics of the product indicate whether its essential character is that it is specifically designed for people with an illness or disability. •                    The designer's or manufacturer's intention of how the particular product is to be used. Indicators of the designer's or manufacturer's intention include an objective consideration of how the product is marketed and the type of outlets at which the product can be purchased. Paragraphs 8 to 10 of GSTD 2021/2 states: Not widely used 8. The phrase 'not widely used' is not defined in the GST Act. It therefore takes its ordinary meaning, having regard to the context in which it appears. It is a question of degree whether a product is not widely used by people without an illness or disability. The Commissioner considers that it is reasonable to conclude that the test is not satisfied if the product is widely purchased by or on behalf of people without an illness or disability, without the need to examine how this class of people in fact use the product.

9. In the context of paragraph 38-45(1)(b), the Commissioner considers 'not widely used' to mean not used by many people who do not have an illness or disability. 10. The following factors will be relevant, but are not an exhaustive list, when considering whether a product is widely used by people without an illness or disability: •                    The product is widely sold in retail or other outlets that predominantly sell standard beds (that is, beds that do not have features specifically designed for people with an illness or disability) to the general public. •                    The marketing material for the product emphasises how it enhances the lifestyle of people without an illness or disability. Specifically designed As outlined in paragraph 7 of GSTD 2021/2, the designer's or manufacturers intention of how the product is to be used, can indicate as to whether it has been specifically designed for people with an illness or disability. Further, an objective view of the design features and characteristics of the product will indicate whether its essential character is that it is specifically designed for people with an illness or disability.

The two manufacturers of the XX chairs are both certified for the manufacturing and distribution of XX products for medical use. You have provided that you work closely with these manufacturers to ensure that the XX chairs are specifically tailored for therapeutic use by individuals with medical conditions and disabilities. Looking at the design features and characteristics of the XX chairs, there is a wide range of varying features that allow for therapeutic XX and physical therapy. Despite having features that may be used by people without an illness or disability as a XX chair for comfort as opposed to therapeutic reasons, there is a design focus by the manufacturers of the XX chairs on people with an illness or disability. Consequently, we consider the XX chairs are specifically designed to be used by people with an illness or disability. It must therefore be determined whether the XX chairs are 'not widely used' by people without an illness or disability despite the manufacturer's intentions. Not widely used In considering whether an item is widely used, paragraph 10 of GSTD 2021/2 provides as follows:

•                     The product is widely sold in retail or other outlets to the general public. •                     The marketing material for the product emphasises how it enhances the lifestyle of people without an illness or disability. You have provided that the XX chairs are not sold in retail or other outlets, as you are the sole retailer of the XX chairs and the manufacturer produces the XX chairs solely for you. Further, in the marketing material that you have provided as part of this private ruling application, as well as information on your website, the medical and therapeutic benefits of the XX chairs are predominately featured. The home page of your website specially describes the XX chairs as being "specifically designed therapeutic XX chairs to support people with pain, injury, or disability - without leaving your living room." Your website also includes testimonials from chiropractors, and you have stated that your customers frequently seek or receive professional advice from healthcare practitioners such as occupational therapists, physiotherapists and chiropractors when deciding on which of your XX chairs to purchase.

Based on the above, we consider the XX chairs are not widely used by people without an illness or disability. Conclusion Paragraphs 38-45(1)(a) of the GST Act and 38-45(1)(b) of the GST Act are satisfied as the XX chairs are covered by item 86 of Schedule 3, are specifically designed for people with an illness or disability and are not widely used by people without an illness or disability. Therefore, the XX chairs are a GST-free supply of medical aids and appliances under section 38-45 of the GST Act.