ATO Interpretative Decision
ATO ID 2002/73
Goods and Services Tax
GST and ToothbrushesFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 service provider, making a GST-free supply under subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a standard toothbrush to a patient?
Decision
No, the entity is not making a GST-free supply under subdivision 38-B of the GST Act when it sells a standard toothbrush to a patient. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a dental service provider. The entity supplies a dental service to a patient that is GST-free under subsection 38-10(1) of the GST Act. The entity also supplies a standard toothbrush to the patient at the same time as providing the dental service. (Note : an electric toothbrush would also be regarded as a standard toothbrush.)
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 subdivision 38-B of the GST Act, the supply of various health related goods and services is GST-free.
There are two provisions within subdivision 38-B under which the supply of toothbrushes may be GST-free.
Subsection 38-10(3) of the GST Act provides that a supply of goods is GST-free if:
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- it is made to a person in the course of supplying to the person a dental service which is GST-free under subsection 38-10(1) of the GST Act; and
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- it is made at the premises at which the dental service is supplied.
In this situation, the standard toothbrush is supplied at the same time as the dental service, the supply of which is GST-free. The standard toothbrush is also supplied from the same premises. Therefore, it is necessary to determine whether the standard toothbrush is supplied 'in the course of supplying' the GST-free dental service.
It is considered that the phrase 'in the course of supplying to the person a service', in the context of subsection 38-10(3) of the GST Act, requires the goods to be supplied at the same point in time at which the GST-free dental service is supplied. In addition, the goods must be either:
- •
- customised or manipulated for the exclusive treatment of the illness or disability of the particular patient who is the recipient of the GST-free dental service; or
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- necessarily utilised as an integral part of the patient's treatment required immediately during that specific consultation.
In this case, the standard toothbrush is not individually customised for the exclusive treatment of the patient. Further, it is not used as an integral part of the patient's treatment required immediately during that specific consultation. As such, the entity is not making a GST-free supply of the standard toothbrush under subsection 38-10(3) of the GST Act.
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:
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- 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(Regulations);
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- is specifically designed for people with an illness or disability; and
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- is not widely used by people without an illness or disability.
Item 29 in the table in Schedule 3 (Item 29) lists 'customised toothbrushes for people with disabilities'. It is considered that customised toothbrushes are toothbrushes that have been adapted to suit the needs of a class of disabled persons.
The standard toothbrush has not been adapted to suit the needs of a class of disabled persons. Accordingly, the standard toothbrush does not fall within Item 29. Therefore, the supply of the standard toothbrush is not GST-free under subsection 38-45(1) of the GST Act.
In summary, the entity is registered for GST and the supply satisfies 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 standard toothbrush to a patient.
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. |
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
subdivision 38-B
subsection 38-10(3)
subsection 38-45(1)
Division 40
Schedule 3
Schedule 3 table item 29
The Regulations
Other References:
Health Issues Register Issue 1.c
Keywords
Goods and services tax
GST Health
GST Other health services
Taxable supply
Section 38-45 - Medical aids & appliances
ISSN: 1445-2782
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