ATO ID 2002/83: GST and computerised massage cushion
Date of decision: 19 May 2001
Business line: Indirect Tax

Issue
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 a computerised massage cushion?

Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a computerised massage cushion. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a supplier of medical aids and appliances. The entity supplies a computerised massage cushion. The entity markets the cushion as a massage device that is designed to alleviate tension and fatigue. The cushion is used for relaxation purposes. The cushion is not designed to assist with the support or positioning of a person with a disability nor is it designed to prevent alleviate some form of disablement. 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.

Reasons for decision
Summary: 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: Item 87 in the table in Schedule 3 to the GST Act (Item 87) lists 'cushions specifically designed for people with disabilities.' It is considered that 'cushions specifically designed for people with disabilities' means a cushion with a specifically designed character or function, that has been made or adapted for the purpose of assisting with the support or positioning of an individual with a disability or to prevent or alleviate conditions associated with that disability. In this case, the entity markets the cushion as a massage device that is designed to alleviate tension and fatigue and is used for relaxation purposes. The cushion is not designed to assist with the support or positioning of a person with a disability nor is it designed to prevent or alleviate some form of disablement. As such, the cushion is not a 'cushion specifically designed for people with disabilities' for the purpose of Item 87. 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 a computerised massage cushion.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 subsection 38-45(1) Division 40 Schedule 3 Schedule 3 table item 87
Other references: Pharmaceutical Issues Register - Attachment A
Subject references: Goods & services tax GST free GST health Section 38-45 - medical aids & appliances Taxable supply