ATO ID 2001/303: GST and pulse oximeters
Date of decision: 27 July 2001
Business line: Indirect Tax

Issue
Is the entity, a supplier of medical, scientific, industrial and laboratory equipment, making a GST-free supply under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a pulse oximeter?

Decision
No, the entity is not making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies a pulse oximeter. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a supplier of medical, scientific, industrial and laboratory equipment. In this case, the entity is supplying a pulse oximeter. 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.

Reasons for decision
Summary: Under subsection 38-45(1) of the GST Act, the supply of certain medical aids and appliances is GST-free where the medical aid or appliance: A pulse oximeter is not specifically listed in Schedule 3; nor is it specified in the Regulations. As such, it is necessary to determine whether a pulse oximeter is a medical aid or appliance that is covered by Schedule 3. The item of most relevance in this case, is item 1 in the table in Schedule 3 to the GST Act (Item 1), which lists 'heart monitors'. Accordingly, the question at issue is whether a pulse oximeter is a heart monitor. The term 'heart monitors' is not defined in the GST Act. As this term is considered to be used in the GST Act in a technical sense, it is appropriate to determine its meaning by reference to a technical publication ( Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222: High Court of Australia [Full Court]). The Stedmans Medical Dictionary (2000) defines a cardiac (heart) monitor to mean: 'an electronic monitor which, when connected to the patient, signals each heart beat with a flashing light, an electrocardiographic curve, an audible signal, or all three'. As such, it is considered that a device with the primary function of monitoring a patient's heartbeat is a 'heart monitor'; and is covered by Item 1. The Stedmans Medical Dictionary (2000) defines an oximeter as 'an instrument for determining photoelectrically the oxygen saturation of a sample of blood'. 'Pulse oximetry' is defined as a procedure performed usually on the finger or ear lobe 'in which the small increase in absorption of light during the systolic pulse is used to calculate oxygen saturation'. Accordingly, a pulse oximeter's primary function is not to monitor a patient's heartbeat but rather to determine the oxygen saturation in the blood. Therefore, a pulse oximeter is not a 'heart monitor' for the purposes of Item 1. As such, the supply by the entity of a pulse oximeter is not covered by Schedule 3 or the Regulations and is not GST-free under subsection 38-45(1) 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 of the GST Act. 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 supply by the entity is a taxable supply under section 9-5 of the GST Act.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 subsection 38-45(1) Schedule 3 Division 40
Case references: Herbert Adams Pty Ltd v FCT (1932) 47 CLR 222: High Court of Australia [Full Court]
Related ATO interpretative decisions: ATO ID 2001/286
Other references: Stedmans Medical Dictionary; 2000, 27th Edition, Lippincott Williams and Wilkins, Maryland, USA.
Subject references: Goods & services tax GST free GST health Medical aids & appliances GST supplies & acquisitions Taxable supply