GST and rubber tips for walking sticks and crutches

Is the entity, a supplier of walking aids, 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 rubber tips for walking sticks and crutches?

Yes, the entity is making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies rubber tips for walking sticks and crutches.

The entity is a supplier of walking aids. The entity supplies rubber tips to replace faulty, worn or broken tips of walking sticks and crutches.

The rubber tips are specifically designed as spare parts for walking sticks and crutches.

The rubber tips are not designed as multiple purpose rubber end stoppers that are also used for different types of goods, such as chairs.

The supply of the walking sticks and crutches is GST-free under subsection 38-45(1) of the GST Act.

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

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.

Spare part is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary (1997) defines spare part to mean 'a part which replaces a faulty, worn, or broken part of a machine'.

Therefore, it is considered that a spare part for a medical aid or appliance is a part that is used to replace a faulty, worn or broken part of a medical aid or appliance. The rubber tips have been designed to replace a faulty, worn or broken part of the walking sticks and crutches. Further, the supply of the walking sticks and crutches is GST-free under subsection 38-45(1) of the GST Act. Therefore, the rubber tips are spare parts for a GST-free medical aid or appliance.

The second requirement is that the spare part is specifically designed as a spare part for a GST-free medical aid or appliance.

Rubber tips are considered to be specifically designed as a spare part for a walking stick or crutch where they exhibit special characteristics that make them suitable for that purpose and where they are not designed as multiple purpose rubber end stoppers that are also used for different types of goods, such as chairs. It is accepted that a rubber tip will be a specifically designed spare part for a walking stick or crutch where it is not a multiple purpose rubber end stopper and it has characteristics such as: • Rounded edge with effective grip from large rubber nodules (sometimes referred to as a C type tip); • Concentric circles and a firm edge that provides stability (sometimes referred to as a D type tip); • Extra wide base providing maximum stability (sometimes referred to as a Z type tip); • A two piece tip featuring a metal ball and socket joint (or similar joint) that allows the base to be in direct contact with the ground at all times. These types usually have a studded base for effective grip.

The rubber tips are specifically designed as a spare part for the walking sticks and crutches. Therefore, the supply satisfies the requirements in subsection 38-45(2) of the GST Act. As such, the entity is making a GST-free supply under subsection 38-45(2) of the GST Act when it supplies rubber tips for walking sticks and crutches.