Private ruling: GST and the supply of medial aids
Published: September 2013

Ruling: Q1: Is your supply of medical aids a GST-free supply of a medical aid or appliance? | A1: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You supply medial aids, when requested by physiotherapists or nurses, as a prescribed item. They are generally provided to patients in residential care homes who have fallen and/or hurt themselves. These patients are at a higher risk of breaking a bone and are usually older people with dementia, Parkinson's disease or other conditions which make them prone to falls. The medial aids are classified as a 'protecting orthosis' and are designed to reduce the risk of fractures by protecting the bone. This is done by spreading the impact forces when the wearer falls on the bone. The medial aids are only provided to patients when they are prescribed by physiotherapists or nurses.

Relevant legislative provisions: 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 Schedule 3 to the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision: Summary: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that: 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 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. (*denotes a defined term in the GST Act.) In your case, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you make the supply of the medial aids for consideration and in the course or furtherance of the enterprise that you carry on. Additionally, these sales are connected with Australia, and you are registered for GST. Therefore your supply will be taxable where it is not input taxed or GST-free. There are no provisions under the GST Act that make the supply of the medial aids input taxed. The only relevant provision that may make the supply of the medial aids GST-free is section 38-45 of the GST Act. Subsection 38-45(1) of the GST Act provides that a supply of a medical aid or appliance is GST-free if: · it is covered by an item in Schedule 3 (Medical Aids and Appliances) to the GST Act (Schedule 3), or is specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations), and · it is specifically designed for people with an illness or disability, and · is not widely used by people without an illness or disability. The only medical aid that may cover the supply of the medial aids is item 69 in the table in Schedule 3 (Item 69) which is listed as 'lower limb orthoses'. In determining whether Item 69 is relevant, it is necessary to consider the meaning of 'lower limb' and 'orthoses'. Neither term is defined in the GST Act. The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW (The Macquarie Dictionary) defines 'orthosis' as: noun (plural orthoses) A device applied to the body to modify position or motion, as a supporting collar, plaster cast etc- orthotic, adj.. The Macquarie Dictionary defines 'modify' as: 1. to change somewhat the form or qualities of; alter somewhat… Stedman's Medical Dictionary, 2000, 27th edn, Lippincott Williams & Wilkins, Baltimore (Stedman's Medical Dictionary) defines 'orthosis' as 'An external orthopaedic appliance, as a brace or splint that prevents or assists movement of the spine or the limbs.' Stedman's Medical Dictionary defines the 'lower limb' as 'the hip, thigh, leg, ankle and foot'. It is considered that a medical aid is a 'lower limb orthosis' where it is designed to be applied to the body to change or alter position or motion, or prevent movement, of the hip, thigh, leg, ankle or foot. In your case, the medial aid is a medical aid, as it is a protecting orthosis. It attaches to the bone and acts as a brace that prevents, or at least greatly reduces the risk of injury to the bone when the wearer falls. It therefore meets Item 69 of Schedule 3. However for a supply of a medical aid listed in Schedule 3 to be GST-free if must be specifically designed for people with an illness or disability, and not widely used by people without an illness or disability. In your case, you have stated that the medial aids are a prescribed item by physiotherapists or nurses, to patients in residential care homes who have fallen and/or hurt themselves. These patients are at a higher risk of breaking a bone. Further, you have indicated that the medial aids are only provided to patients when they are prescribed by medical personnel in the course of treating and preventing these injuries. It is therefore considered that the medial aids are specifically supplied to people with an illness or disability and are not widely used by people without an illness or disability. Therefore, the supply of the medial aids is a GST-free supply under subsection 38-45(1) of the GST Act.