ATO Interpretative Decision

ATO ID 2001/346

Goods and Services Tax

GST and implantable joint prostheses
FOI status: may be released
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Issue

Is the entity, a supplier of implantable prostheses, 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 implantable joint prostheses to a medical practitioner for use in a surgical procedure?

Decision

No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies implantable joint prostheses to a medical practitioner for use in a surgical procedure. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of implantable prostheses. In this case, the entity is supplying implantable joint prostheses to a medical practitioner for use in a medical procedure.

The entity is registered for goods and services tax (GST). The supply meets 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 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.

Implantable joint prostheses are not covered in Schedule 3 and neither are they specified in the GST Regulations. As such, the entity is not making a GST-free supply under subsection 38-45(1) 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.

[Note 1: The importation of implantable joint prostheses is a taxable importation under section 13-5 of the GST Act, where the entity imports these items and enters them for home consumption (within the meaning of the Customs Act 1901) and the importation is not a non-taxable importation under Part 3-2 of the GST Act.
Note 2: From 31 October 2005, the supply of an implantable prosthesis to a patient as part of an episode of hospital treatment will be GST-free where the requirements of section 38-20 are satisfied.]

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.
November 2005 Added Note 2 as a result of an amendment to the definition of 'hospital treatment' in subsection 67(4) of the National Health Act 1953, which applies to section 38-20 of the GST Act. The amendment came into effect on 31 October 2005.

Date of decision:  6 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 13-5
   Division 38
   subsection 38-45(1)
   Division 40
   Schedule 3

Customs Act 1901
   The Act

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

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

Siebel/TDMS Reference Number:  CW226432

Business Line:  Indirect Tax

Date of publication:  20 September 2001

ISSN: 1445-2782

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