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Edited version of your written advice
Authorisation Number: 1012819866134
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Ruling
Subject: Goods and services tax (GST) and medical aids and appliances
Issue 1
Are you 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 you supply a part for a GST-free medical aid?
Answer
Yes, your supply of the part is GST-free under subsection 38-45(2) of the GST Act.
Issue 2
Is GST payable on your importation of the part in Australia?
Answer
No, GST is not payable on your importation of the part as your importation of the part is a non-taxable.
Relevant facts and circumstances
• You are an Australian company that is registered for GST.
• You import and supply the part which is designed as a part for a medical aid.
• The part is manufactured overseas by the non-resident (manufacturer). The manufacturer is not registered for GST in Australia.
• The part is supplied to replace worn out, fault, broken or misplaced components of the medical aid.
• The part is designed specifically as an accessory to and for use in conjunction the medical aid.
• The part cannot be used for any other purpose or in conjunction with any other product aside from the medical aid.
• The part is used specially for the people with an illness or disability.
• The part is marketed to hospitals and nursing home for the people with an illness or disability.
• The part is not marketed to the wider community.
• The part is not available on the open market.
• You have provided a copy of the brochure and print-outs which provides a detailed description of the part.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 13-5
A New Tax System (Goods and Services Tax) Act 1999 Section 13-10
A New Tax System (Goods and Services Tax) Act 1999 Section 38-45
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(2)
A New Tax System (Goods and Services Tax) Act 1999 Schedule Sch3
New Tax System (Goods and Services Tax) Regulations 1999
Reasons for decision
Issue 1
A supply of a spare part for a medical aid or appliance will be GST-free under Division 38 of the GST Act if it satisfies the requirements in subsection 38-45(2) of the GST Act.
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.
Based on information provided, the part is imported and supplied to replace worn out, faulty or broken or misplaced components of medical aid. As such, this part is considered to be a spare part for the purpose of the GST Act.
Furthermore, the part is supplied for the specially designed for medical aid that is GST-free under subsection 38-45(1) of the GST Act. Therefore your supply part satisfies all the requirements in subsection 38-45(2) of the GST Act. Accordingly your supply of the part will be GST-free under section 38-45 of the GST Act and no GST will be payable the supply.
Issue 2
Under section 13-5 of the GST Act an importation is not a taxable importation to the extent that it is a non-taxable importation.
Paragraph 13-10(b) of the GST Act states an importation is a non-taxable importation if it would have been a supply that was GST-free or input taxed if it had been a supply.
As stated in the reasons for decisions issue 1, your supply of the part will be
GST-free supply under subsection 38-45(2) of the GST Act. Therefore, if importation of this part had been a supply, it would have been GST-free supply. Hence, your importation of the part will satisfy the condition at paragraph 13-10(b) of the GST Act.
Consequently, your importation of part will be non-taxable importation. Hence your importation of part will not be taxable importation under subsection 13-5(1) of the GST Act. Accordingly, no GST will be payable on the importation of the part.
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