ATO Interpretative Decision

ATO ID 2001/286

Goods and Services Tax

GST and spare parts for a pulse oximeter
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a spare part for a pulse oximeter?

Decision

No, the entity is not making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies a part for 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 spare part for a pulse oximeter. The supply of a pulse oximeter is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive requirements of section 9-5 of the GST Act.

Reasons for Decision

Subsection 38-45(2) of the GST Act provides that a supply of a spare part will be a GST-free supply, if the spare part is:

•: supplied as a spare part for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act; and
•: specifically designed as a spare part for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act.

The term 'spare part' is not defined in the GST Act. As such, it is necessary to rely on the ordinary meaning of that phrase. The Macquarie Dictionary (1997) defines 'spare part' as, amongst other things, 'a part which replaces a faulty, worn, or broken part of a machine....'

In this case, the entity is supplying a part to replace a faulty, worn or broken component of a pulse oximeter. As such, the part is considered to be a 'spare part' for the purposes of the GST Act. However, a pulse oximeter is not a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act. Therefore, the supply of a spare part for a pulse oximeter is not a GST-free supply under subsection 38-45(2) 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. 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 entity is making a taxable supply under section 9-5 of the GST Act.

Date of decision: 27 July 2001

Year of income:

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   subsection 38-45(1)
   subsection 38-45(2)
   Division 38
   Division 40

Related ATO Interpretative Decisions
ATO ID 2001/303

Other References:
The Macquarie Dictionary, 1997, 3rd edition, The Macquarie Library Pty Ltd, New South Wales.
GST Pharmaceutical Health Forum - Issue 1.g

Keywords
Goods & services tax
GST free
GST health
Medical aids & appliances
GST supplies & acquisitions
Taxable supply

Business Line: GST

Date of publication: 8 September 2001

ISSN: 1445-2782

history

	Date:	Version:
You are here	27 July 2001	Original statement
	24 February 2006	Archived

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