GST and supply of an addition to an existing denture to a dentist

Is the entity, a dental laboratory, 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 an addition to an existing denture to a dentist?

No, the entity is not making a GST-free supply under section 38-45 of the GST Act when it supplies an addition to an existing denture to a dentist. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a dental laboratory. The entity makes a supply to a dentist of an addition to an existing denture. The entity does not deal directly with the public.

An addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. The service involves re-working and re-moulding the existing denture.

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.

Under subsection 38-45(1) of the GST Act, the supply of a medical aid and appliance 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.

Item 30 of Schedule 3 lists 'dentures and artificial teeth'. An addition to an existing denture is not considered to be a supply of a 'denture' for the purposes of item 30 of Schedule 3. The addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. Therefore, the supply of an addition to a denture is not GST-free under subsection 38-45(1) of the GST Act.

Subsection 38-45(2) of the GST Act provides that spare parts, that are specifically designed as spare parts for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act are also GST-free.

The term 'spare part' is not defined in the GST Act, therefore it is given its ordinary meaning. The Macquarie Dictionary (1997) defines a spare part as 'a part which replaces a faulty, worn, or broken part of a machine....'.

In this case, the entity is supplying a service of re-working and re-moulding the existing denture and incorporated into that service is the supply of the artificial teeth. It is considered that a supply of an addition to the denture (including the additional teeth) is not a spare part because it does not replace an existing part that is faulty, worn or broken.

The supply of the teeth is a component of the supply of the service of altering the denture but in this context, it is not a supply of a specifically designed spare part for a denture under subsection 38-45(2) of the GST Act.

The supply of a denture addition is not GST-free under subsections 38-45(1) or (2) 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 when it supplies an addition to a denture. [Note: Subsection 38-10(1) of the GST Act provides that, in certain circumstances, supplies of other health services are GST-free. However, in this case, subsection 38-10(1) of the GST Act does not apply to the supply made by the entity to the dentist. Paragraph 38-10(1)(c) of the GST Act requires that the entity provides 'appropriate treatment' to the recipient of the supply. It is considered that appropriate treatment is provided when a recognised professional assesses the recipient's state of health and determines a process to pursue, in an attempt to preserve, restore or improve the physical or psychological wellbeing of that recipient insofar as that recognised professional's particular area of training allows and will include subsequent supplies for the determined process. In this case, the entity is not providing appropriate treatment to the dentist.]

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 .

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 .