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ATO Interpretative Decision

ATO ID 2001/520

Goods and Services Tax

GST and supply of an addition to an existing denture to a dentist
FOI status: may be released

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 dental laboratory, making a GST-free supply under section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an addition to an existing denture to a dentist?

Decision

No, the entity is not making a GST-free supply under section 38-45 of the GST Act when it supplies an addition to an existing denture to a dentist. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a dental laboratory. The entity makes a supply to a dentist of an addition to an existing denture. The entity does not deal directly with the public.

An addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. The service involves re-working and re-moulding the existing denture.

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 a medical aid and appliance is GST-free where the medical aid or appliance:

•
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(GST Regulations); and
•
is specifically designed for people with an illness or disability; and
•
is not widely used by people without an illness or disability.

Item 30 of Schedule 3 lists 'dentures and artificial teeth'. An addition to an existing denture is not considered to be a supply of a 'denture' for the purposes of item 30 of Schedule 3. The addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. Therefore, the supply of an addition to a denture is not GST-free under subsection 38-45(1) of the GST Act.

Subsection 38-45(2) of the GST Act provides that spare parts, that are specifically designed as spare parts for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act are also GST-free.

The term 'spare part' is not defined in the GST Act, therefore it is given its ordinary meaning. The Macquarie Dictionary (1997) defines a spare part as 'a part which replaces a faulty, worn, or broken part of a machine....'.

In this case, the entity is supplying a service of re-working and re-moulding the existing denture and incorporated into that service is the supply of the artificial teeth. It is considered that a supply of an addition to the denture (including the additional teeth) is not a spare part because it does not replace an existing part that is faulty, worn or broken.

The supply of the teeth is a component of the supply of the service of altering the denture but in this context, it is not a supply of a specifically designed spare part for a denture under subsection 38-45(2) of the GST Act.

The supply of a denture addition is not GST-free under subsections 38-45(1) or (2) of the GST Act. The entity is registered for GST and the supply meets 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 an addition to a denture.

[Note: Subsection 38-10(1) of the GST Act provides that, in certain circumstances, supplies of other health services are GST-free. However, in this case, subsection 38-10(1) of the GST Act does not apply to the supply made by the entity to the dentist. Paragraph 38-10(1)(c) of the GST Act requires that the entity provides 'appropriate treatment' to the recipient of the supply. It is considered that appropriate treatment is provided when a recognised professional assesses the recipient's state of health and determines a process to pursue, in an attempt to preserve, restore or improve the physical or psychological wellbeing of that recipient insofar as that recognised professional's particular area of training allows and will include subsequent supplies for the determined process. In this case, the entity is not providing appropriate treatment to the dentist.]

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.

Date of decision:  23 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 9-80
   subsection 38-10(1)
   paragraph 38-10(1)(c)
   section 38-45
   subsection 38-45(1)
   subsection 38-45(2)
   Schedule 3
   Schedule 3 table item 30

A New Tax System (Goods and Services Tax) Regulations 2019
   The Regulations

Other References:
The Macquarie Dictionary, 3rd edn, The Macquarie Library Pty Ltd, New South Wales

Keywords
Goods and services tax
GST-free
GST health
Section 38-10 - other health services
Section 38-45 - medical aids and appliances
GST supplies & acquisitions
Taxable supply

Siebel/TDMS Reference Number:  CW227201

Business Line:  Indirect Tax

Date of publication:  26 October 2001

ISSN: 1445-2782


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