GST and spare parts for a pulse oximeter

Is the entity, a supplier of medical, scientific, industrial and laboratory equipment, 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 it supplies a spare part for a pulse oximeter?

No, the entity is not making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies a part for a pulse oximeter. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a supplier of medical, scientific, industrial, and laboratory equipment. In this case, the entity is supplying a spare part for a pulse oximeter. The supply of a pulse oximeter is not a GST-free supply of a medical aid or appliance under subsection 38-45(1) of the GST Act.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive requirements of section 9-5 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....'

In this case, the entity is supplying a part to replace a faulty, worn or broken component of a pulse oximeter. As such, the part is considered to be a 'spare part' for the purposes of the GST Act. However, a pulse oximeter is not a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act. Therefore, the supply of a spare part for a pulse oximeter is not a GST-free supply under subsection 38-45(2) of the GST Act.

In this case, the entity is registered for GST and the supply satisfies the other positive limbs of section 9-5. Furthermore, as the supply is neither GST-free under any of the other provisions in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act; the entity is making a taxable supply under section 9-5 of the GST Act.