ATO ID 2005/4: GST and mattress as spare part for hospital bed
Date of decision: 20 August 2004
Year of income: Year ended 30 June 2004
Business line: Indirect Tax

Issue
Is the entity, a supplier of medical aids and appliances, making a GST-free supply of a spare part under subsection 38-45(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a hospital bed mattress?

Decision
Yes, the entity is making a GST-free supply of a spare part under subsection 38-45(2) of the GST Act when it supplies a hospital bed mattress.

Facts
The entity is registered for goods and services tax (GST). The entity is a supplier of medical aids and appliances. The entity supplies hospital bed mattresses. The mattresses have a PVC cover consisting of medical grade vinyl or polyurethane to prevent penetration of fluids. The cover may either be welded shut or have a zip allowing the cover to be removed. Mattresses with a zip have a flap over the zip. The mattresses are specifically designed to fit 'hospital-type beds' listed at item 61 in the table in Schedule 3 to the GST Act (Item 61), the supplies of which are GST-free under subsection 38-45(1) of the GST Act. There is no agreement between the entity and the recipient that the supply of the mattresses will not be a GST-free supply.

Reasons for decision
Summary: Under subsection 38-45(2) of the GST Act, the supply of a spare part is GST-free if the spare part is: The entity's mattresses have a PVC cover consisting of medical grade vinyl or polyurethane to prevent penetration of fluids. The mattresses are specifically designed to fit 'hospital-type beds' listed at Item 61, the supplies of which are GST-free under subsection 38-45(1) of the GST Act. Therefore, the entity is supplying a mattress that is specifically designed for a GST-free medical aid or appliance. However, the entity's supply will only be GST-free if the mattress is a 'spare part' for a hospital-type bed. The term 'spare part' is not defined in the GST Act. 'Spare part' is defined in The Macquarie Dictionary , 1997, 3rd edition, The Macquarie Library Pty Ltd NSW, as a 'part which replaces a faulty, worn or broken part of a machine'. Accordingly, a part need not actually be replacing something which is faulty, worn or broken to qualify as a spare part, but just be capable of doing so. Therefore, it needs to be determined if a mattress is 'part' of a bed. Neither the term 'hospital-type bed' nor the word 'bed' are defined in the GST Act. The Macquarie Dictionary , 1997, 3rd edition, The Macquarie Library Pty Ltd NSW, defines the word 'bed' to mean, amongst other things, ' 1. a piece of furniture upon which or within which a person sleeps. 2. the mattress and bedclothes together with the bedstead. 3. the bedstead alone. 4 ...' Therefore, 'bed' could mean the frame and mattress or the frame only. The context within which the word 'bed' is used in Item 61 does not suggest that 'bed' should be given its more restrictive meaning. Therefore, the word 'bed' as used in Item 61 refers to both the bed frame and its mattress. Accordingly, a mattress forms part of a bed for the purposes of Item 61. The entity is supplying a mattress that is capable of replacing an existing hospital bed mattress that is worn, faulty or broken. Therefore, the mattress supplied by the entity is a 'spare part' for a hospital bed. Therefore, the entity is making a GST-free supply of a spare part under subsection 38-45(2) of the GST Act when it supplies a hospital bed mattress.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 38-45(1) subsection 38-45(2) Schedule 3 Schedule 3 table item 61
Related ATO interpretative decisions: ATO ID 2005/5
Other references: The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales
Subject references: Goods and services tax GST-free GST health Medical aids and appliances