ATO Interpretative Decision

ATO ID 2001/522 (Withdrawn)

Goods and Services Tax

GST and a supply of a chrome cobalt frame used to make a denture
FOI status: may be released

This ATO ID is withdrawn as the ATO view is contained in paragraph 79 of Class Ruling CR 2011/58 Goods and services tax: goods and services supplied by dental prosthetists and technicians (of the Oral Health Professionals Association) that applies to tax periods commencing on or after 1 July 2010. Despite its withdrawal, this ATO ID continues to be a precedential view for tax periods starting before 1 July 2010.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 casting 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 makes a supply of a chrome cobalt frame which is used to make a denture?

Decision

No, the entity is not making a GST-free supply under section 38-45 of the GST Act when it makes a supply of a chrome cobalt frame which is used to make a denture. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a casting laboratory. The entity makes a supply of a chrome cobalt frame which is used to make a denture. The entity supplies the chrome cobalt frame to a dental laboratory.

The chrome cobalt frame is not used to replace a faulty, worn or broken part of a GST-free 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 1999 (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.

A chrome cobalt frame for a denture is not covered in Schedule 3 or the GST Regulations. Therefore, the supply of a chrome cobalt frame 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....'.

On this basis, it is considered that a supply of a part that can be used to replace a faulty, worn, or broken part of another thing, is a spare part under subsection 38-45(2) of the GST Act, provided that the part supplied is specifically designed for another thing, the supply of which is GST-free under subsection 38-45(1) of the GST Act.

In this case, a chrome cobalt frame is not considered to be a spare part because it is not supplied to replace a faulty, worn, or broken part of a GST-free denture. Furthermore, a chrome cobalt frame is not specifically designed as a spare part for a GST-free denture. Therefore, the supply of a chrome cobalt frame is not GST-free under subsection 38-45(2) of the GST Act.

The supply of a chrome cobalt frame used to make a denture is not GST-free under subsections 38-45(1) or 38-45 (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 a chrome cobalt frame used to make a denture.

[Note: Section 38-10 of the GST Act provides that, in certain circumstances, supplies of other health services and goods supplied during those health services are GST-free. However, in this case, section 38-10 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.]

Date of decision: 23 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-45
   subsection 38-45(1)
   subsection 38-45(2)
   Division 40
   Schedule 3

A New Tax System (Goods and Services Tax) Regulations 1999
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 38-45 - medical aids and appliances
GST supplies & acquisitions
Taxable supply

Business Line: Indirect Tax

Date of publication: 26 October 2001

ISSN: 1445-2782

history

	Date:	Version:
	23 August 2001	Original statement
You are here	12 July 2013	Archived

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