Class Ruling

CR 2013/14

Goods and services tax: goods and services supplied by dentists

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What this Ruling is about

1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates.

Relevant provision(s)

2. The relevant provisions dealt with in this Ruling are:

•

section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

•

section 9-80 of the GST Act

•

section 38-7 of the GST Act

•

section 38-10 of the GST Act

•

section 38-60 of the GST Act

•

section 38-45 of the GST Act

•

section 195-1 of the GST Act

All subsequent legislative references in the Ruling are to the GST Act unless otherwise indicated.

Class of entities

3. The class of entities to which this Ruling applies consists of dentists who are members of the Australian Dental Association Inc (ADA).

4. Reference to a dentist is a reference to a dentist who is a recognised professional.

Qualifications

5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling.

6. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 10 to 14 of this Ruling.

7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then this Ruling:

•

has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and

•

may be withdrawn or modified.

8. [Omitted.]

Date of effect

9. This Ruling applies on or after 20 February 2013. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

Scheme

10. The following description of the scheme is based on information provided by the applicant.

11. Members of the ADA consist of dentists and dental students.

12. The dentists supply their services to patients and third parties.

13. The dentists also supply customised toothbrushes for people with disabilities, dentures and artificial teeth, and mandibular advancement splints. These products are listed as medical aids and appliances in Schedule 3 to the GST Act.

14. The supplies made by dentists also include specifically designed spare parts for medical aids and appliances and repairs and modifications to the medical aids and appliances.

Ruling

15. This Ruling addresses the goods and services tax (GST) treatment of the supply of goods and services by dentists. This Ruling includes Attachment A at page 23.

Supplies made by dentists under section 38-7

Supplies of services

16. Supplies of dental services and repairs of dental goods by a dentist to a patient for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973 are GST-free under subsection 38-7(1) (see paragraphs 31 to 34 of this Class Ruling).

Supplies of goods to patients (goods other than medical aids and appliances covered by section 38-45)

17. Supplies of goods to a patient in the course of supplying that patient with a GST-free service under subsection 38-7(1) are also GST-free under subsection 38-7(3) if the supply is made to the patient at the premises at which the GST-free service is supplied (see paragraphs 68 to 69 of this Class Ruling).

Supplies made by dentists under section 38-10

Supplies of services

18. Supplies of dental services by a dentist to a patient that are generally accepted in the dental profession as being necessary for the appropriate treatment of that patient are GST-free under subsection 38-10(1) (see paragraphs 35 to 67 of this Class Ruling).

Supplies of goods to patients (goods other than medical aids and appliances covered by section 38-45)

19. Supplies of goods to a patient in the course of supplying that patient with a GST-free dental service under subsection 38-10(1) are also GST-free under subsection 38-10(3) if the supply is made to that patient at the premises at which the GST-free service is supplied (see paragraphs 68 to 69 of this Class Ruling).

Supplies of medical aids and appliances under section 38-45

Supplies of medical aids and appliances used in the dental industry

20. Supplies of 'customised toothbrushes for people with disabilities', 'dentures and artificial teeth', and 'mandibular advancement splints' are GST-free under subsection 38-45(1) at all points in the supply chain. Things made or consumed in the process of constructing and supplying one of these items form part of the one overall GST-free supply of that item, even if the components are itemised separately on the bill (see paragraphs 70 to 81 of this Class Ruling).

Supplies of specifically designed spare parts for medical aids and appliances

21. The supply of a specifically designed spare part for a GST-free medical aid or appliance ('customised toothbrushes for people with disabilities', 'dentures and artificial teeth', and 'mandibular advancement splints') is GST-free under subsection 38-45(2).

22. Generic spare parts that are not specifically designed for a GST-free medical aid or appliance are not GST-free (see paragraphs 82 to 85 of this Class Ruling).

Supplies of specifically designed spare parts with labour services

23. Where a specifically designed spare part is supplied together with a labour component that is not GST-free by itself, the GST treatment will depend on how the supply is characterised (see paragraphs 87 to 97 of this Class Ruling).

24. A supply is GST-free if the dominant part of the supply is the specifically designed spare part and the labour is merely integral, ancillary or incidental to the supply of the spare part. However, the supply is taxable^[1] if the dominant part is the labour and the spare part is merely integral, ancillary or incidental to the labour.

25. If neither the specifically designed spare part nor the labour is integral, ancillary or incidental to the other, the supply is a mixed supply that is partly GST-free (the spare part) and partly taxable (the labour).

Commissioner of Taxation
20 February 2013

Appendix 1 - Explanation

26. Under the GST Act, some goods and services supplied by dentists are GST-free where certain requirements are satisfied.

27. GST is payable on supplies that are taxable supplies but not on those that are GST-free. A dentist may claim input tax credits for the GST included in the price of things acquired for making taxable or GST-free supplies or both.

Taxable supplies - section 9-5

28. Under section 9-5, an entity makes a taxable supply if:

•

it is made for consideration

•

it is made in the course or furtherance of an enterprise that the entity carries on

•

the supply is connected with Australia, and

•

the entity is registered or required to be registered for GST.

29. However, section 9-5 also provides that a supply is not taxable to the extent that it is GST-free or input taxed.

30. For the purposes of this ruling, the provisions of the GST Act dealing with input taxed supplies are not relevant to any supplies made in the dental industry. The relevant GST-free provisions of the GST Act are considered below.

GST- free supplies under section 38-7

Medical services - subsection 38-7(1)

31. Subsection 38-7(1) states:

A supply of a *medical service is GST-free.

32. 'Medical service' is defined in section 195-1 to mean:

(a)

a service for which a medicare benefit is payable under Part II of the Health Insurance Act 1973; or

(b)

...(this part of the definition is not relevant to dental services)

33. Some dental services (including repairs of dental goods) are listed in the Medicare Benefits Schedule. For a dental service to be GST-free under subsection 38-7(1), a Medicare benefit must be payable for that service.^[2]

34. Where a dental service is listed in the Medicare Benefits Schedule but a Medicare benefit is not payable because certain other criteria are not met, the definition of medical service is not satisfied. For example, a Medicare benefit is not payable for a supply of a dental service to a non-resident even though that service is listed in the Medicare Benefits Schedule. In these circumstances, whether the dental service is GST-free or not needs to be considered under section 38-10.

GST-free supplies under section 38-10

Dental services - subsection 38-10(1)

35. Subsection 38-10(1) states:

A supply is GST-free if:

(a)

it is a service of a kind specified in the table in this subsection, or of a kind specified in the regulations; and

(b)

the supplier is a *recognised professional in relation to the supply of services of that kind; and

(c)

the supply would generally be accepted, in the profession associated with supplying services of that kind, as being necessary for the appropriate treatment of the *recipient of the supply.

36. All 3 of the requirements must be satisfied for a supply of dental services to be GST-free under this category.

Paragraph 38-10(1)(a)

Are dental services specified in the table or the regulations?

37. 'Dental' is a service specified at item 6 in the table in subsection 38-10(1).

Paragraph 38-10(1)(b)

Who is a recognised professional in relation to the supply of dental services?

38. Section 195-1 defines 'recognised professional' to mean the following:

A person is a recognised professional, in relation to the supply of a service of kind specified in the table in subsection 38-10(1), if:

(a)

the service is supplied in a State or Territory in which the person has a permission or approval, or is registered, under a *State law or a *Territory law prohibiting the supply of services of that kind without such permission, approval or registration; or

(b)

the service is supplied in a State or territory in which there is no State law or Territory law requiring such permission, approval or registration, and the person is a member of a professional association that has uniform national registration requirements relating to the supply of services of that kind; or

(c)

in the case of services covered by item 3 in the table - the service is supplied by an accredited service provider within the meaning of section 4 of the Hearing Services Administration Act 1977.

39. In all States and Territories, dentists are required to be registered pursuant to the relevant State or Territory Act. Accordingly, a person who is registered pursuant to the State or Territory Act will be considered to be a 'recognised professional' in dental services pursuant to paragraph 195-1(a).

Paragraph 38-10(1)(c)

40. To satisfy this requirement, the service must generally be accepted in the profession associated with supplying services of that kind (in this case, the dental profession) as being necessary for the appropriate treatment of the recipient of the supply.

What is 'appropriate treatment'?

41. A dentist will provide 'appropriate treatment' to the patient if the dentist assesses the patient's state of health and determines a process for preserving, restoring or improving the physical or psychological wellbeing of that patient. 'Appropriate treatment' includes any subsequent services provided to the patient as part of that process.

42. 'Appropriate treatment' also includes medical treatment of a preventative nature, for example, a periodic oral examination where there is no evidence of an ailment prior to attendance. However, this does not extend to the supply of services and goods in relation to customised mouthguards. Whilst a customised mouthguard is a device that may prevent or reduce damage sustained to the mouth and teeth in the event of an injury, it is not considered to be 'treatment' that is performed on a patient.

43. To be GST-free, the dental profession must accept that the service is necessary and acceptable treatment, taking into account the patient's individual circumstances.

44. Services provided in assessing a patient for insurance or litigation purposes, that is, medico-legal services, are not 'necessary for the appropriate treatment' of the patient and are not GST-free.

45. Services which are predominantly for the improvement of the appearance of the patient are also not 'necessary for the appropriate treatment' of the patient and therefore, are not GST-free.

46. Services that are intended to improve the health of the patient but which also comprise a 'cosmetic' component, for example, reconstruction of a badly damaged tooth, are 'necessary for the appropriate treatment' of the patient and are therefore, GST-free.

47. A modification to a denture or other appliance undertaken for the changing condition of the patient is appropriate treatment of that patient and is GST-free if supplied by a dentist to a patient. The 'changing condition of the patient' will include situations such as:

•

an addition to the denture where the patient has had a tooth extracted; or

•

a modification or adjustment to a denture due to a change in the shape or structure of a patient's mouth, palate, gums or jaw.

48. Services for determining that a modification is required and any subsequent services to ensure that the denture fits correctly are also GST-free if the elements of section 38-10 are satisfied.

Who is the 'recipient of the supply'?

49. Paragraph 38-10(1)(c) requires that the supply must be generally accepted in the profession associated with supplying services of that kind as being 'necessary for the appropriate treatment of the recipient of the supply'.

50. As only an individual can receive treatment as a patient, the 'recipient of the supply' must be an individual for the supply to be GST-free under section 38-10.

Supply of dental services under arrangements with third parties

51. In some cases, dentists will have agreements with third parties under which there is a binding obligation on the dentist to provide something to the patient for which the third party is liable to pay. In these cases, the third party is the recipient of the supply. Depending on the particular agreement, the dentist may be making supplies to the patient as well as the third party.^[3]

52. In the absence of a binding obligation, there may still be a supply by the dentist to the third party where the following factors^[4] are present:

(a)

there is a pre-existing framework or agreement between the third party and the dentist which contemplates that the parties act in a particular manner in respect of supplies by the dentist to particular patients or a class of patients;

(b)

the pre-existing framework or agreement:

(i)

identifies a mechanism by which the particular patients or the class of patients are to be identified such that the supplies made to them come within the scope of the framework or agreement; and

(ii)

specifies that the third party is under an obligation to pay the dentist if there is a relevant supply by the dentist to a patient and also sets out a mechanism by which such payment is authorised;

(c)

the framework or agreement and the mechanism for authorising the payment are in existence before the supply by the dentist to the patient (that is, the dentist knows in advance that the third party is obliged to pay some or all of the consideration in the event of the supply to the patient);

(d)

the dentist makes the supply to the patient in conformity with the pre-existing framework or agreement between the parties; and

(e)

the obligation of the third party to make payment pursuant to the pre-existing framework or agreement is not an administrative arrangement to pay on behalf of the patient for a liability owed by the patient to the dentist. Rather, once the supply becomes a supply to which the framework or agreement applies, the framework or agreement establishes a liability owed by the third party (not the patient) to the dentist in the event that there is a supply by the dentist to the patient.

53. Under section 38-60, where the third party is an insurer, an operator of a statutory compensation scheme or compulsory third party scheme (scheme operator), or an Australian government agency, the supply to the third party by the dentist is GST-free to the extent that the underlying supply of the dental service to the patient is a GST-free supply under section 38-10 or 38-7.

54. Under subsection 38-60(4), the dentist and the third party can agree that the supply not be treated as GST-free. The dentist and third party may choose to not treat supplies as GST-free where, for example, there is a combination of GST-free and taxable supplies and determining the amounts for each supply may be complex. The option of not treating any of the supplies as GST-free may be administratively easier for the parties.

55. Where a third party is not an insurer, a scheme operator or an Australian government agency, the supply to the third party is not a GST-free supply under section 38-60.

Example 1 - supply of health services by a dentist to an insurer

56. ABC Health Fund has a pre-existing agreement with a dentist for the supply of goods and services to settle claims made under their insurance policies.

57. The agreement outlines what both parties need to do when the dentist treats an ABC Health Fund member. Under the agreement, the payment to the dentist from ABC health Fund is for the supply made by the dentist to ABC Health Fund for supplying dental treatment to the ABC Health Fund member.

58. As the supply of the dental treatment to the ABC Health Fund member is a GST-free supply under section 38-10, the supply by the dentist to ABC Health Fund is GST-free under section 38-60.

Example 2 - supply of health services by a dentist to a third party not being an insurer, a scheme operator or an Australian government agency

59. XYZ Company contracts with a dentist to provide dental treatment to its employees. XYZ Company is not an insurer, a scheme operator or an Australian government agency.

60. XYZ Company is the recipient of the supply of professional services from the dentist. If the dentist is registered for GST, the supply of the services is a taxable supply.

61. Section 38-60 does not apply in this scenario to make the supply to the third party GST-free because XYZ Company is not an insurer, a scheme operator or an Australian government agency.

Supplies paid for by someone other than the patient

62. Under other types of arrangements, a third party meets the patient's liability to the dentist without a supply being made to the third party by the dentist. A feature of these arrangements is that the agreement for the supply of goods or services is between the dentist and the patient and the obligation to pay for that supply remains with the patient. The third party merely pays for the supply on behalf of the patient.

63. Who pays for a supply of services is not relevant when working out if the supply is GST-free. If the recipient of the supply is the patient, it does not matter that the supply is being paid for on the patient's behalf by a third party.^[5]

Example 3 - the third party merely pays for the supply of dental treatment on a patient's behalf

64. Jenny is a dentist who is a 'recognised professional' for GST purposes. Adam makes an appointment to see Jenny. At the initial consultation, Adam tells Jenny that he sustained damage to his tooth whilst at work and that she can bill his employer for the costs. Jenny confirms with Adam's employer that she can send the bill to them.

65. Jenny does not have a pre-existing agreement or a binding obligation with Adam's employer to provide the treatment to Adam.

66. Jenny is making a GST-free supply to Adam which is paid for by Adam's employer. Jenny is not making any supply to Adam's employer - they are merely paying the bill on Adam's behalf. The fact that another entity pays for the service does not alter its GST-free status.

67. Goods and Services Tax Ruling GSTR 2006/9 (Supplies), at paragraphs 114-246, provides detailed guidance in analysing third party arrangements for determining who the recipient of a supply is.

Dental goods - subsections 38-7(3) and 38-10(3)

68. If a dentist supplies goods as part of a GST-free service, those goods are also GST-free under subsection 38-7(3) or 38-10(3) if they are supplied to the patient in the course of supplying a dental service and the supply is made at the premises at which the service is supplied.

69. The phrase 'in the course of supplying' means that the goods are supplied at the same time as the dental service and they are:

•

individually customised or manipulated for the treatment of the illness or disability of that particular patient; or

•

essential for treating that patient during that particular consultation.

Supplies of medical aids and appliances under section 38-45

Medical aids and appliances - subsection 38-45(1)

70. Subsection 38-45(1) states:

A supply is GST-free if:

(a)

it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and

(b)

the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.

71. A supply that satisfies all the requirements in subsection 38-45(1) is GST-free. The supply is GST-free no matter who makes the supply or who the supply is made to.

72. In determining whether a medical aid or appliance is specifically designed for people with an illness or disability, reference should be made to its features and the designer's or manufacturer's intention of how the good is to be used. Indicators of the designer's or manufacturer's intention of how the good is to be used include how the good is marketed and the type of retail outlets at which the goods can be purchased.

73. In determining whether a medical aid or appliance is widely used by people without an illness or disability, reference should be made to how the wider community uses these goods. That is, the common purpose for which the goods are purchased. Subsection 38-45(1) does not require the medical aid or appliance to be used in a particular way but rather focuses on the purpose for which the wider community purchases these products. Irregular or uncommon use of a medical aid or appliance in a way contrary to its manufactured purpose does not prevent the good from being GST-free.

74. The items in the table in Schedule 3 to the GST Act that are of relevance to the dental industry are:

•

item 29 - 'customised toothbrushes for people with disabilities'

•

item 30 - 'dentures and artificial teeth', and

•

item 75 - 'mandibular advancement splints'.

75. For GST purposes, 'customised toothbrushes for people with disabilities' are considered to be toothbrushes that have been adapted, for example, contoured, to suit the needs of a class of disabled persons.

76. 'Dentures' for GST purposes, are considered to be an artificial restoration of several teeth (partial denture) or all of the teeth of either jaw (full denture). 'Artificial teeth' are considered to be those which are fabricated and replace natural teeth in form and function. The phrase 'artificial teeth' includes a single tooth as well as multiple teeth. Full crowns and bridges are artificial teeth.

77. A 'mandibular advancement splint' is a small device made of plastic or similar material that is worn in the mouth whilst sleeping (similar in appearance to a mouthguard). It is designed to help stop some types of snoring. The splint is designed to push the mandible (lower jaw) forward helping to keep the tongue clear of the pharynx (the back of the throat). The splints are also sometimes used for the treatment of temporomandibular joint disorder (TMJ).

Consumables

78. Where, in the course of supplying one of the products listed at item 28, item 30 or item 75 in the table in Schedule 3, a dentist consumes various things, there is only one overall supply of the listed item. Things made and consumed in the process of constructing and supplying a listed item form part of the one overall GST-free supply of that product, even if the components are separately itemised in the bill.

79. Examples of things consumed in the process of constructing and supplying a GST-free medical aid or appliance include oil, lubricant, glue and generic parts like screws and wires. Consumable items are acquired with the intention that they will be destroyed, consumed or expended. They do not retain their individual character or nature when a new medical aid or appliance is supplied or when a repaired medical aid or appliance is returned to its owner.

80. However, where these things are supplied separately to the medical aid or appliance, they are only GST-free if they are specifically designed spare parts of that medical aid or appliance (see paragraphs 82 to 84 of this Class Ruling).

Example 4 - goods used or consumed in the process of constructing and supplying a GST-free medical aid or appliance

81. Steve (a dentist) contracts Mike (a dental technician) to make a crown for Steve's patient. In order to make the crown, Mike must first create a plaster model. Mike itemises the crown and plaster model separately on his bill to Steve. The plaster model is integral to the manufacturing process and is not used for any other purpose. The plaster model forms part of the overall supply of the crown, all of which is GST-free. Goods made and consumed in the process of constructing and supplying a GST-free medical aid or appliance form part of the overall GST-free supply of that item.

Spare parts for GST-free medical aids and appliances - subsection 38-45(2)

82. Under subsection 38-45(2), a spare part for a GST-free medical aid or appliance is also GST-free if is specifically designed as a spare part for that GST-free medical aid or appliance and is supplied for that purpose.

83. For GST purposes, a 'spare part' is a part that can be used to replace a faulty, worn or broken part of another thing. The part need only be capable of replacing the faulty, worn or broken part. It does not actually have to be used for that purpose.

84. Spare parts that are not specifically designed to replace a faulty, worn or broken part of a GST-free medical aid or appliance are not GST-free. This means that things like generic screws which are not specifically designed for a GST-free medical aid or appliance are not GST-free spare parts. However, as explained in paragraphs 78 to 80 of this Class Ruling, things used and or consumed in the construction and overall supply of a GST-free medical aid or appliance are part of that overall GST-free supply. Therefore, whilst a generic screw when supplied on its own is not a GST-free spare part for a denture because it is not specifically designed for that purpose, it would be GST-free if that screw formed part of the supply of the denture.

Example 5 - a part that cannot be used as a spare part for a GST-free medical aid or appliance

85. A chrome/cobalt casting frame is the internal framework for a denture. Dentures are covered by item 30 in the table in Schedule 3 and are GST-free. Whilst the framework is a component for a denture, it is not a 'spare part' for a denture. This is because if the framework is broken, it is either repaired or a completely new denture is supplied. A new framework is never actually supplied to replace a faulty, worn or broken framework of the denture. Therefore, it is not a GST-free spare part.

Repair services

86. Other than repairs of dental goods which may be GST-free under section 38-7 (see paragraphs 31 to 34 above), there is no specific exemption in the GST Act for the supply of repairs of medical aids or appliances or their spare parts.

Supply of spare parts with labour services

87. Where the specifically designed spare parts are supplied together with a labour component (for example, installation or fitting service) that is not GST-free, the GST treatment will depend on how the supply is characterised. The table below provides a summary of how the supply may be characterised.

What is the character of the supply?

What does integral, ancillary or incidental mean?

88. Indicators^[6] that a part of a supply is integral, ancillary or incidental to the dominant part of the supply include the following:

•

it represents a marginal proportion of the total value of the package compared to the dominant part

•

it is necessary or contributes to the supply as a whole but cannot be identified as the dominant part of the supply

•

it contributes to the proper performance of the contract to supply the dominant part, and

•

a supplier would reasonably conclude that it does not constitute for customers an aim in itself but is a means of better enjoying the dominant thing supplied.

Example 6 - GST-free supply of spare parts to which labour is integral, ancillary or incidental

89. A tooth is fitted to a denture to replace a broken or missing tooth under a 'supply and fit' contract. The supply of the tooth itself is GST-free under section 38-7or section 38-10. The fitting of the tooth is merely integral, ancillary or incidental to the supply of the tooth. The fitting of the tooth and the supply of the tooth is a single composite GST-free supply of an 'artificial tooth'. See Type A in the table in paragraph 87 of this Class Ruling.

Example 7 - taxable supply of labour to which the spare parts are integral, ancillary or incidental

90. A denture is in poor condition and is sent to be restored which involves a significant amount of labour. The restoration service is not GST-free under section 38-7 as no Medicare benefit is payable for the service. As part of that restoration, a clasp is replaced. Of itself, the clasp is a GST-free spare part for a denture under subsection 38-45(2). However, in this case, the supply of the clasp is integral, ancillary or incidental to the supply of the restoration service which is not GST-free. The supply of the clasp merely contributes to the proper performance of the contract to restore the denture, takes up a marginal proportion of the total value of the service package, and the customer does not seek the supply of the clasp as an aim in itself, but merely as part of the supply of the restoration service. The supply of the restoration service and the spare part is a single composite taxable supply. See Type B in the table in paragraph 87 of this Class Ruling.

Example 8 - Partly taxable and partly GST-free supply of spare parts and labour as neither component is integral, ancillary or incidental to each other

91. A tooth is added to a denture to replace a broken or missing tooth under a 'supply and fit' contract. At the same time, a small crack which is discovered in the denture base is repaired. This repair service is not GST-free under section 38-7 as no Medicare benefit is payable for the service. An extra charge is made for the repair of the crack. Neither the repair of the crack nor the fitted tooth is integral, incidental or ancillary to each other. The fitted tooth part of the supply is GST-free under section 38-10 and the repair part is taxable. The supply is partly taxable and partly GST-free. See Type C in the table in paragraph 87 of this Class Ruling.

Apportionment

A supply that is partly taxable and partly GST-free

92. Where a dentist makes a supply which is partly taxable and partly GST-free (a mixed supply), the dentist will need to apportion the consideration charged for the supply between the GST-free and taxable parts pursuant to section 9-80.

93. A reasonable basis for apportionment must be used and each case must be determined on its own facts. Records must be kept that explain the method of apportionment used. Goods and Services Tax Ruling GSTR 2001/8 gives further guidance on mixed supplies and apportionment.

94. As a means of minimising compliance costs, part of a supply may be treated as being integral, ancillary or incidental to the other part if the consideration that would be apportioned to it (if it were part of a mixed supply) does not exceed the lesser of:

•

$3.00; or

•

20% of the consideration of the total supply.

95. This approach may be adopted to treat a supply as a composite supply (that is, either wholly GST-free or taxable), although it might otherwise be considered as a mixed supply. However, if the consideration for a part exceeds the lesser of $3.00 or 20% of the consideration for the total supply, it does not necessarily mean that the part is not integral, ancillary or incidental.

Charging GST on a GST-free medical aid or appliance or a specifically designed spare part

96. In some circumstances, it may be difficult to determine those supplies that are GST-free and those that are taxable.

97. Subsection 38-45(3) allows a supplier and recipient to agree not to treat supplies, or a particular supply, as GST-free. For example, if a supply of a medical aid or appliance is made to another business, both businesses can agree to treat the supply as taxable.

Appendix 2 - Detailed contents list

98. The following is a detailed contents list for this Ruling:

Attachment A

Unless specifically stated, it is assumed that the recipient of all of these supplies is the patient.

Supplies that are GST-free are GST-free under section 38-7, section 38-10 or section 38-45, as applicable.

Discussion of notes in relation to the GST Status

Notes :

Not previously issued as a draft

References

ATO references:
NO 1-4CJADZI

Legislative References:
ANTS(GST)A99 9-5
ANTS(GST)A99 9-80
ANTS(GST)A99 38-7
ANTS(GST)A99 38-7(1)
ANTS(GST)A99 38-7(2)
ANTS(GST)A99 38-7(3)
ANTS(GST)A99 38-10
ANTS(GST)A99 38-10(1)
ANTS(GST)A99 38-10(1)(a)
ANTS(GST)A99 38-10(1)(b)
ANTS(GST)A99 38-10(1)(c)
ANTS(GST)A99 38-10(3)
ANTS(GST)A99 38-45
ANTS(GST)A99 38-45(1)
ANTS(GST)A99 38-45(2)
ANTS(GST)A99 38-45(3)
ANTS(GST)A99 38-60
ANTS(GST)A99 195-1
ANTS(GST)A99 Sch 3
TAA 1953
Health Insurance Act 1973 Pt II

Case References:
Commissioner of Taxation v. Secretary to the Department of Transport (Victoria)
(2010) 188 FCR 167
[2010] FCAFC 84
2010 ATC 20-196
(2010) 76 ATR 306