ATO ID 2002/73: GST and Toothbrushes
Date of decision: 24 July 2001
Business line: Indirect Tax

Issue
Is the entity, a dental service provider, making a GST-free supply under subdivision 38-B of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells a standard toothbrush to a patient?

Decision
No, the entity is not making a GST-free supply under subdivision 38-B of the GST Act when it sells a standard toothbrush to a patient. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a dental service provider. The entity supplies a dental service to a patient that is GST-free under subsection 38-10(1) of the GST Act. The entity also supplies a standard toothbrush to the patient at the same time as providing the dental service. (Note : an electric toothbrush would also be regarded as a standard toothbrush.) 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 subdivision 38-B of the GST Act, the supply of various health related goods and services is GST-free. There are two provisions within subdivision 38-B under which the supply of toothbrushes may be GST-free. Subsection 38-10(3) of the GST Act provides that a supply of goods is GST-free if: In this situation, the standard toothbrush is supplied at the same time as the dental service, the supply of which is GST-free. The standard toothbrush is also supplied from the same premises. Therefore, it is necessary to determine whether the standard toothbrush is supplied 'in the course of supplying' the GST-free dental service. It is considered that the phrase 'in the course of supplying to the person a service', in the context of subsection 38-10(3) of the GST Act, requires the goods to be supplied at the same point in time at which the GST-free dental service is supplied. In addition, the goods must be either: In this case, the standard toothbrush is not individually customised for the exclusive treatment of the patient. Further, it is not used as an integral part of the patient's treatment required immediately during that specific consultation. As such, the entity is not making a GST-free supply of the standard toothbrush under subsection 38-10(3) 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: Item 29 in the table in Schedule 3 (Item 29) lists 'customised toothbrushes for people with disabilities'. It is considered that customised toothbrushes are toothbrushes that have been adapted to suit the needs of a class of disabled persons. The standard toothbrush has not been adapted to suit the needs of a class of disabled persons. Accordingly, the standard toothbrush does not fall within Item 29. Therefore, the supply of the standard toothbrush is not GST-free under subsection 38-45(1) of the GST Act. In summary, the entity is registered for GST and the supply satisfies 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 a standard toothbrush to a patient.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 subdivision 38-B subsection 38-10(3) subsection 38-45(1) Division 40 Schedule 3 Schedule 3 table item 29
Other references: Health Issues Register Issue 1.c
Subject references: Goods and services tax GST Health GST Other health services Taxable supply Section 38-45 - Medical aids & appliances