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ATO Interpretative Decision

ATO ID 2001/346

Goods and Services Tax

GST and implantable joint prostheses
FOI status: may be released

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplier of implantable prostheses, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies implantable joint prostheses to a medical practitioner for use in a surgical procedure?

Decision

No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies implantable joint prostheses to a medical practitioner for use in a surgical procedure. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of implantable prostheses. In this case, the entity is supplying implantable joint prostheses to a medical practitioner for use in a medical procedure.

The entity is registered for goods and services tax (GST). The supply meets 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 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 2019(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.

Implantable joint prostheses are not covered in Schedule 3 and neither are they specified in the GST Regulations. As such, the entity is not making a GST-free supply under subsection 38-45(1) 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.

[Note 1: The importation of implantable joint prostheses is a taxable importation under section 13-5 of the GST Act, where the entity imports these items and enters them for home consumption (within the meaning of the Customs Act 1901) and the importation is not a non-taxable importation under Part 3-2 of the GST Act.
Note 2: From 31 October 2005, the supply of an implantable prosthesis to a patient as part of an episode of hospital treatment will be GST-free where the requirements of section 38-20 are satisfied.]

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.
November 2005 Added Note 2 as a result of an amendment to the definition of 'hospital treatment' in subsection 67(4) of the National Health Act 1953, which applies to section 38-20 of the GST Act. The amendment came into effect on 31 October 2005.

Date of decision:  6 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 13-5
   Division 38
   subsection 38-45(1)
   Division 40
   Schedule 3

Customs Act 1901
   The Act

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

Keywords
Goods and services tax
GST free
GST health
Medical aids & appliances
Taxable supply

Siebel/TDMS Reference Number:  CW226432

Business Line:  Indirect Tax

Date of publication:  20 September 2001

ISSN: 1445-2782


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