ATO ID 2002/1060: GST and batteries used in wheelchairs and scooters
Date of decision: 13 February 2002
Business line: Indirect Tax

Issue
Is the entity, a supplier of medical aids and appliances, 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 sells a multi-purpose battery for use in a motorised wheelchair or scooter used for the carriage of people with disabilities?

Decision
No, the entity is not making a GST-free supply under subsection 38-45(2) of the GST Act when it sells a multi-purpose battery for use in a motorised wheelchair or scooter used for the carriage of people with disabilities. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a supplier of medical aids and appliances. The entity is selling a multi-purpose battery. The entity supplies these batteries for use in motorised wheelchairs and scooters used for the carriage of people with disabilities. However, the batteries in question are not specifically designed for a particular purpose and are widely used in other applications such as golf buggies and electrical products. The supply of a motorised wheelchair or scooter used for the carriage of people with disabilities is GST-free 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 limbs of section 9-5 of the GST Act.

Reasons for decision
Summary: Subsection 38-45(2) of the GST Act provides that a supply is GST-free if the thing supplied is: The term '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 GST-free medical aid or appliance is a part that can be used to replace a faulty, worn, or broken part of the GST-free medical aid or appliance. The entity is supplying a battery that is used to replace the faulty, worn or broken battery of a motorised wheelchair or scooter used for the carriage of people with disabilities. The supply of a motorised wheelchair or scooter used for the carriage of people with disabilities is GST-free under subsection 38-45(1) of the GST Act. Therefore, the first requirement in subsection 38-45(2) of the GST Act is satisfied. To satisfy the second requirement in subsection 38-45(2) of the GST Act, the battery must be specifically designed as a spare part for a GST-free medical aid or appliance. The entity supplies the battery for use in motorised wheelchairs and scooters that are GST-free under subsection 38-45(1) of the GST Act. However, the battery is not specifically designed for this purpose. The battery is a multi-purpose battery that can be used in many applications. As such, the second requirement in subsection 38-45(2) of the GST Act is not satisfied and the supply of the battery is not GST-free under subsection 38-45(2) of the GST Act. The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. In addition, the supply is not GST-free under any other provisions in Division 38 of the GST Act nor is it input taxed under Division 40 of the GST Act. As such, the entity is making a taxable supply under section 9-5 of the GST Act when it sells a multi-purpose battery for use in a motorised wheelchair or scooter used for the carriage of people with disabilities.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 subsection 38-45(1) subsection 38-45(2) Division 40
Other references: The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales.
Subject references: Goods & services tax GST free GST health Section 38-45 - medical aids & appliances GST supplies & acquisitions Taxable supply