Private ruling: GST and the supply of postural support chairs
Date of advice: 29 October 2015
Published: October 2015

Ruling: Q1: Is the supply of a certain range of chairs, which has a postural support seating system, a GST-free supply? | A1: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states: You make a taxable supply if: (a) you make the 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; 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. (*denotes a defined term in section 195-1 of the GST Act) In this case, you make a supply of the chairs for consideration in the course of your enterprise. The supply is connected with Australia and you are registered for GST. Further, the supply does not fall within any provision of the GST Act which would be input taxed. Therefore, what remains to be determined is whether your supply is GST-free. Relevantly, subsection 38-45(1) of the GST Act outlines the circumstances in which the supply of certain medical aids and appliances will be GST-free and states: 38-45 Medical aids and appliances (1) A supply is GST-free if: (a) it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and (b) the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability. Subsection 38-45(1) of the GST Act essentially sets out three elements, all of which must be satisfied before a supply can be considered GST-free. These are that the supply must be: • listed in the table in Schedule 3 to the GST Act or in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), • specifically designed for people with an illness or disability, and • not widely used by people without an illness or disability. Based on the information that you have provided, we are of the view that the chairs satisfy all of the above mentioned requirements of subsection 38-45(1) of the GST Act. Accordingly the supply of your chairs is GST-free under section 38-45 of the GST Act. This includes any chairs that you may add to this range of chairs with a postural support seating system that is specifically designed for people with an illness or disability and is not widely used by people without and illness or disability.

Relevant facts and circumstances: You are a specialist supplier of seating. You manufacture and supply specialist injury management seating which is a postural support seating system for offices (herein referred to as the 'Chairs' in this ruling). You work closely with your customers and Occupational Therapists to tailor make Chairs that remedy or control pain and discomfort for office workers who have injuries. You are registered for Goods and Services Tax (GST). You construct Chairs to suit a client's particular injury to enable them to work seated and eliminate the discomforts of the injury so that they are productive at work. You do this in conjunction with the employer's Rehabilitation staff and the Occupational Therapists' design instruction. You construct your postural support seating by tailoring elements to suit the control or abatement of the injury issue and these elements can be fully personalised to the needs of individual users. Each Chair is individually constructed from a selection of adjustable components that are assembled to maintain full support of the back. The seat is designed to attend to any seating issues so that it fits the specific back shape of individual users thus providing total contact and lateral support to the back. The adjustable posture system is highly dynamic which allows the posture support seating system to cradle the user's back and provide total support regardless of the user's seated position. Your postural support seating system is designed in a variety of standard and custom configurations. The mechanical design is built around several different configurations based on the condition of the user and the use of the Chair. The adjustable elements of the posture support seating system are tailored to suit the client to relieve lumbar disc pressure and reduce muscle activity in the back thus providing pain relief for those who suffer from chronic back pain. These are set up under Occupational Therapist instruction to minimise the amount of existing back pain and aid in the prevention or worsening of various back conditions. To increase spinal and coccyx mobilization, your Chairs may also have a synchronised action between the seat and the back or individually controlled back and/or seat functions. This action may also be controlled with other components to enable the client to easily use sit-stand desking if recommended by the therapist, for enhancing mobility. The use of tilt and or swivel and raising and lowering of the postural support seating is also determined by its application and the user's condition. Arm rests are typically supplied with the postural support seating to take weight off the spine. The Therapeutic Goods Administration (TGA) indicates that The Chairs is a Disability Aid therefore Therapeutic Goods (Excluded Goods) Order No. 1 of 2011. Your Chair is marketed through educational presentations, seminars, and tailored training programs for retailers, private practise therapists, the health sector (hospitals and insurance companies) as well as corporate Occupational Health & Safety Officers. It is also marketed through trade, safety, health, and other appropriate shows and exhibitions. Your sales team for your Chairs are required to undertake special training in the specification usage of these products. You hold regular training sessions which are conducted by trained ergonomic advisors. Often custom assessments are performed by occupational therapists directly with the end users during which the end users' health insurance representative may also be present. Due to the design of your Chairs, the main source of your sales is via occupational therapist and other health professional referrals. You do not sell the Chairs to people without an illness or disability as the purchase price is significantly higher than the price of standard chairs and the postural support seating system due to its design is not attractive and is complex to set up. The majority of your sales of the Chairs is as a result of referrals made by medical practitioners, physiotherapists and chiropractors.

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 Section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999