ATO ID 2001/639: GST and oxygen sensors for respiratory appliances
Date of decision: 7 September 2001
Business line: Indirect Tax

Issue
Is the entity, a supplier of medical appliances, 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 oxygen sensors for ventilators and sleep apnoea machines?

Decision
Yes, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies oxygen sensors for ventilators and sleep apnoea machines.

Facts
The entity is a supplier of medical appliances. In this case, the entity is making a supply of oxygen sensors. Oxygen sensors are devices used for measuring the oxygen concentration in a patient's breathing mixture. The oxygen sensors, in this case, are used in conjunction with ventilators and sleep apnoea machines. 'Ventilators' are covered under item 123 in the table in Schedule 3 to the GST Act (Item 123). 'Sleep apnoea machines' are covered under item 128 in the table in Schedule 3 to the GST Act (Item 128). In this case, the supply of the ventilators and sleep apnoea machines satisfy the other requirements of subsection 38-45(1) of the GST Act and, as such, are GST-free. The oxygen sensors are specifically designed for people with an illness or disability and not widely used by people without an illness or disability. There is no agreement between the entity and the recipient that the supply will not be treated as a GST-free supply. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: Under subsection 38-45(1) of the GST Act, the supply of a medical aid or appliance is GST-free where the medical aid or appliance: The only item of relevance to this case is item 127 in the table in Schedule 3 to the GST Act (Item 127). Item 127 lists, 'respiratory appliance accessories'. The word 'accessories' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that word. The Macquarie Dictionary (1997) defines the word 'accessories' to be the plural of the word 'accessory'. The word 'accessory is defined to include the following meaning, 'a subordinate part or object; something added or attached...'. In this case, the oxygen sensor is a subordinate part which is attached and used in conjunction with ventilators and sleep apnoea machines. As such, it is an accessory to the ventilators and sleep apnoea machines. Ventilators are listed at Item 123 and sleep apnoea machines are listed at Item 128. Under section 182-15 of the GST Act and paragraph 182-10(2)(b) of the GST Act, the category heading of 'Respiratory appliances - other products for those with breathing difficulties' may be used to confirm that the meaning in Item 123 and Item 128 is the ordinary meaning. As such, ventilators and sleep apnoea machines are respiratory appliances. Therefore, the oxygen sensors are respiratory appliance accessories and are covered under Item 127. The oxygen sensors are specifically designed for people with an illness or disability and not widely used by people without an illness or disability. Therefore, the entity is making a GST-free supply under subsection 38-45(1) of the GST Act when it supplies oxygen sensors for ventilators and sleep apnoea machines.

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 123 Schedule 3 table item 127 Schedule 3 table item 128
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