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ATO Interpretative Decision

ATO ID 2005/87

Goods and Services Tax

GST and modifying an individual's surgical shoes
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

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 a service of modifying an individual's surgical shoes?

Decision

No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a service of modifying an individual's surgical shoes. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of footwear. The entity also supplies services to modify shoes.

The entity is not a practitioner of any of the other health services listed in the table in subsection 38-10(1) of the GST Act.

An individual required modifications to be made to their surgical shoes. The individual provides their shoes and the specifications for the modifications to the entity. The entity then modifies the individual's surgical shoes to the specifications. Any goods that may be provided as part of the modification process are merely ancillary to the modification service.

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

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 1999 (GST Regulations)
•
is specifically designed for people with an illness or disability, and
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the thing supplied is not widely used by people without an illness or disability.

Item 41 in the table in Schedule 3 lists 'surgical shoes, boots, braces and irons'.

However, the entity is not supplying the shoes. The entity is supplying a service of modifying the entity's surgical shoes. There is no item in the table in Schedule 3 that covers the modification of an existing shoe. Therefore, the entity is not making a supply covered by subsection 38-45(1) of the GST Act.

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 any other provision in 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 makes modifications to a client's surgical shoes.

Note: where the entity is supplying one of the services that are listed in the table in subsection 38-10(1) of the GST Act that is relevant to this type of service (such as podiatry), it is supplied by a recognised professional in relation to that listed service and the entity modifies a surgical shoe due to the changing shape or condition of the patient or the patient's foot, it is considered that this is generally accepted within that profession as being necessary for the appropriate treatment of the recipient of the supply (that is, the recipient of the supply is a patient rather than a third party), and the supply of such services will be GST-free.

Date of decision:  30 July 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   subsection 38-45(1)
   Schedule 3
   Schedule 3 table item 18

A New Tax System (Goods and Services Tax) Regulations 1999
   The Regulations

Related ATO Interpretative Decisions
ATO ID 2005/88
ATO ID 2005/89
ATO ID 2005/90
ATO ID 2005/91

Keywords
Goods and services tax
GST free
GST health
Section 38-45 - medical aids & appliances
GST supplies & acquisitions
Taxable supply

Business Line:  GST

Date of publication:  1 April 2005

ISSN: 1445-2782

history
  Date: Version:
You are here 30 July 2002 Original statement
  16 March 2007 Archived

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