ATO Interpretative Decision
ATO ID 2001/210 (Withdrawn)
Goods and Services Tax
GST and hearing aid batteriesFOI status: may be released
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This ATO ID is withdrawn, as it is no longer necessary. The ATO view expressed in this ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplier of medical aids and appliances, 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 supplies a generic battery for use in a hearing aid?
Decision
No, the entity is not making a GST-free supply under section 38-45 of the GST Act when it supplies a generic battery for use in a hearing aid. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of medical aids and appliances. The entity is supplying a generic battery for use in a hearing aid. The supply of the hearing aid is a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.
This generic battery is supplied as a spare part for the hearing aid but it is not specifically designed as a spare part for the hearing aid.
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 certain medical aids and appliances will be 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.
Of most relevance to this case is item 46 of Schedule 3, which lists 'batteries specifically designed for use with hearing aids'. In this case, the entity is supplying a generic battery for use with a hearing aid. It is considered that a generic battery is not specifically designed for use with a hearing aid because it can be used for many other purposes. Furthermore, such batteries are not 'specifically designed for people with an illness or disability' and would be 'widely used by people without an illness or disability'.
Therefore, as the generic battery is not covered by any of the items in Schedule 3 or the Regulations, the entity is not making a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.
Subsection 38-45(2) of the GST Act provides that a supply of a spare part is GST-free if it is 'supplied as a spare part' for a GST-free medical aid or appliance; and it is 'specifically designed as a spare part' for a GST-free medical aid or appliance.
In this case, although the generic battery is supplied as a spare part for a hearing aid that is a GST-free medical aid or appliance (under subsection 38-45(1) of the GST Act), it is not specifically designed as a spare part for the hearing aid. As such, the entity is not making a GST-free supply of a spare part under subsection 38-45(2) of the GST Act.
Accordingly, the supply of a generic battery for use in a hearing aid is not GST-free under section 38-45 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.
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
section 38-45
section 38-45(1)
section 38-45(2)
Schedule 3
item 46 of Schedule 3
Division 40
The Regulations Related ATO Interpretative Decisions
ATO ID 2001/211
ATO ID 2001/212
Other References:
GST Consultative Forum on Health - Issues Log issue 4.a.3
Keywords
Goods & services tax
GST free
GST health
Medical aids & appliances
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 12 October 2001 | Original statement | |
| You are here | 6 November 2020 | Archived |