ATO Interpretative Decision
ATO ID 2001/303
Goods and Services Tax
GST and pulse oximetersFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 medical, scientific, industrial and laboratory equipment, 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 pulse oximeter?
Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a pulse oximeter. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of medical, scientific, industrial and laboratory equipment. In this case, the entity is supplying a pulse oximeter.
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:
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- 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(Regulations); and
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- is specifically designed for people with an illness or disability; and
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- is not widely used by people without an illness or disability.
A pulse oximeter is not specifically listed in Schedule 3; nor is it specified in the Regulations. As such, it is necessary to determine whether a pulse oximeter is a medical aid or appliance that is covered by Schedule 3.
The item of most relevance in this case, is item 1 in the table in Schedule 3 to the GST Act (Item 1), which lists 'heart monitors'. Accordingly, the question at issue is whether a pulse oximeter is a heart monitor.
The term 'heart monitors' is not defined in the GST Act. As this term is considered to be used in the GST Act in a technical sense, it is appropriate to determine its meaning by reference to a technical publication (Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222: High Court of Australia [Full Court]). The Stedmans Medical Dictionary (2000) defines a cardiac (heart) monitor to mean: 'an electronic monitor which, when connected to the patient, signals each heart beat with a flashing light, an electrocardiographic curve, an audible signal, or all three'.
As such, it is considered that a device with the primary function of monitoring a patient's heartbeat is a 'heart monitor'; and is covered by Item 1.
The Stedmans Medical Dictionary (2000) defines an oximeter as 'an instrument for determining photoelectrically the oxygen saturation of a sample of blood'. 'Pulse oximetry' is defined as a procedure performed usually on the finger or ear lobe 'in which the small increase in absorption of light during the systolic pulse is used to calculate oxygen saturation'.
Accordingly, a pulse oximeter's primary function is not to monitor a patient's heartbeat but rather to determine the oxygen saturation in the blood. Therefore, a pulse oximeter is not a 'heart monitor' for the purposes of Item 1. As such, the supply by the entity of a pulse oximeter is not covered by Schedule 3 or the Regulations and is not GST-free under subsection 38-45(1) of the GST Act.
In this case, the entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, as the supply is neither GST-free under any of the other provisions in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act; the supply by the entity is a taxable supply under section 9-5 of the GST Act.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 9 April 2019 | Throughout | Updated A New Tax System (Goods and Services Tax) Regulations 1999 to A New Tax System (Goods and Services Tax) Regulations 2019. |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
subsection 38-45(1)
Schedule 3
Division 40
The Regulations
Case References:
Herbert Adams Pty Ltd v FCT
(1932) 47 CLR 222: High Court of Australia [Full Court]
ATO ID 2001/286
Other References:
Stedmans Medical Dictionary; 2000, 27th Edition, Lippincott Williams and Wilkins, Maryland, USA.
Keywords
Goods & services tax
GST free
GST health
Medical aids & appliances
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782