ATO ID 2001/520: GST and supply of an addition to an existing denture to a dentist
Date of decision: 23 August 2001
Business line: Indirect Tax

Issue
Is the entity, a dental laboratory, making a GST-free supply under section 38-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an addition to an existing denture to a dentist?

Decision
No, the entity is not making a GST-free supply under section 38-45 of the GST Act when it supplies an addition to an existing denture to a dentist. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a dental laboratory. The entity makes a supply to a dentist of an addition to an existing denture. The entity does not deal directly with the public. An addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. The service involves re-working and re-moulding the existing denture. 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 a medical aid and appliance is GST-free where the medical aid or appliance: Item 30 of Schedule 3 lists 'dentures and artificial teeth'. An addition to an existing denture is not considered to be a supply of a 'denture' for the purposes of item 30 of Schedule 3. The addition to an existing denture is a service that alters the denture to accommodate an additional tooth or teeth. Therefore, the supply of an addition to a denture is not GST-free under subsection 38-45(1) of the GST Act. Subsection 38-45(2) of the GST Act provides that spare parts, that are specifically designed as spare parts for a medical aid or appliance that is GST-free under subsection 38-45(1) of the GST Act are also GST-free. The term 'spare part' is not defined in the GST Act, therefore it is given its ordinary meaning. The Macquarie Dictionary (1997) defines a spare part as 'a part which replaces a faulty, worn, or broken part of a machine....'. In this case, the entity is supplying a service of re-working and re-moulding the existing denture and incorporated into that service is the supply of the artificial teeth. It is considered that a supply of an addition to the denture (including the additional teeth) is not a spare part because it does not replace an existing part that is faulty, worn or broken. The supply of the teeth is a component of the supply of the service of altering the denture but in this context, it is not a supply of a specifically designed spare part for a denture under subsection 38-45(2) of the GST Act. The supply of a denture addition is not GST-free under subsections 38-45(1) or (2) of the GST Act. The entity is registered for GST and the supply meets 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 an addition to a denture.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 section 9-80 subsection 38-10(1) paragraph 38-10(1)(c) section 38-45 subsection 38-45(1) subsection 38-45(2) Schedule 3 Schedule 3 table item 30
Other references: The Macquarie Dictionary, 3rd edn, The Macquarie Library Pty Ltd, New South Wales
Subject references: Goods and services tax GST-free GST health Section 38-10 - other health services Section 38-45 - medical aids and appliances GST supplies & acquisitions Taxable supply