ATO Interpretative Decision

ATO ID 2002/225

Goods and Services Tax

GST and ear moulds for hearing aids
FOI status: may be released
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Issue

Is the entity, a supplier of medical aids and appliances, 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 an ear mould for use as a spare part for a hearing aid?

Decision

Yes, the entity is making a GST-free supply under subsection 38-45(2) of the GST Act, when it supplies an ear mould for use as a spare part for a hearing aid.

Facts

The entity is a supplier of medical aids and appliances. The entity supplies an ear mould to replace a faulty, worn or broken part for a GST-free hearing aid for the hearing impaired.

The ear mould is specifically designed as a spare part for a hearing aid.

The supply of a hearing aid is GST-free under subsection 38-45(1) of the GST Act.

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

Reasons for Decision

Subsection 38-45(2) of the GST Act provides that a supply of a spare part is 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...'

The part is supplied to replace a faulty, worn or broken component of a medical aid. Accordingly, the part is considered a 'spare part' for the purposes of the GST Act. Furthermore, the part is supplied as a spare part for a medical aid that is GST-free under subsection 38-45(1) of the GST Act. Therefore, the supply satisfies the first requirement in subsection 38-45(2) of the GST Act.

The ear mould is specifically designed for a hearing aid that is GST-free under subsection 38-45(1) of the GST Act. Therefore, it meets the second requirement.

Therefore, the entity is making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies an ear mould for use as a spare part for a hearing aid.

[Note: The supply of an ear mould is not GST-free under subsection 38-45(1) of the GST Act as a medical aid or appliance as ear moulds are not covered by the table in Schedule 3 to the GST Act nor specified in the A New Tax System (Goods and Services Tax) Regulations 2019.]

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:  25 June 2001

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

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

Related ATO Interpretative Decisions
ATO ID 2001/210
ATO ID 2001/211
ATO ID 2001/212
ATO ID 2001/216

Other References:
The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales

Keywords
Goods and Services Tax
GST-free
GST health
Section 38-45 - medical aids & appliances

Siebel/TDMS Reference Number:  CW212956

Business Line:  Indirect Tax

Date of publication:  8 March 2002

ISSN: 1445-2782

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