The ATO has released a class ruling 2011/58 in relation to the GST payable on dental prosthetists and services provided by Dental Technicians to dentists.
The supplies of dental services by a dental prosthetist to a patient is generally accepted in the dental profession as being necessary for the appropriate treatment of that patient and is GST-free under subsection 38-10.
However supplies made by a dental technician are not GST-free under section 38-10 as Dental technicians are restricted by the relevant State or Territory legislation to providing services to the Dentists and not directly to patients. As such, they only make supplies to other business entities and so those supplies would not be to the recipient of the supply, that is, a patient as is required by paragraph 38-10.
However, supplies of ‘customised toothbrushes for people with disabilities, dentures and artificial teeth, and mandibular advancement splints are GST-free under subsection 38-45(1) at all points in the supply chain. These products are listed as medical aids and appliances in Schedule 3 to the GST Act. Things made or consumed in the process of constructing and supplying one of these items form part of the one overall GST-free supply of that item, even if the components are itemised separately on the bill.
Subsection 38-45 (1) states that a supply is GST-free if: –
- it is covered by Schedule 3 (medical aids and appliances), or specified in the regulations; and
- the thing supplied is specifically designed for people with an illness or disability, and is not widely used by people without an illness or disability.
The items in the table in Schedule 3 that are of relevance to the dental industry are:
- item 29 – customised toothbrushes for people with disabilities– these are considered to be toothbrushes that have been adapted, for example, contoured, to suit the needs of a class of disabled persons.
- item 30 – ‘dentures and artificial teeth – these are considered to be an artificial restoration of several teeth (partial denture) or of all of the teeth of either jaw (full denture). ‘Artificial teeth’ are considered to be those which are fabricated and replace natural teeth in form and function. The phrase ‘artificial teeth’ includes one single tooth as well as a multiple of teeth. Full crowns and bridges are artificial teeth.
- item 75 – ‘mandibular advancement splints’ – a small device made of plastic or similar material that is worn in the mouth whilst sleeping (similar in appearance to a mouthguard). It is designed to help or assist to stop some types of snoring. The splint is designed to push the mandible (lower jaw) forward helping to keep the tongue clear of the pharynx (the back of the throat). The splints are also sometimes used for the treatment of temporomandibular joint disorder (TMJ).
Where, in the course of supplying one of the products listed at item 29, item 30 or item 75 in the table in Schedule 3 to the GST Act, a dental prosthetist or dental technician consumes various other things, there is only one overall supply of the listed product. Things made and consumed in the process of constructing and supplying a listed product form part of the one overall GST-free supply of that product, even if the components are separately itemised in the bill.
For example, David (a dental technician) is contracted by Owen (a dentist) to make a crown for Owen’s patient. In order to make the crown, David must first create a plaster model. David itemises the crown and plaster model separately on his bill to Owen. The plaster model is integral to the manufacturing process and is not used for any other purpose. The plaster model forms part of the overall supply of the crown, all of which is GST-free. Goods made and consumed in the process of constructing and supplying a GST-free medical aid or appliance form part of the overall GST-free supply of that item.
However, where these things are supplied separately to the medical aid or appliance, for example, in the course of a repair service or as spare parts themselves, they will only be GST-free if they are specifically designed spare parts of that medical aid or appliance. Generic spare parts which do not form part of the initial GST-free supply of the aid or appliance but which are supplied separately on their own will not be GST-free.
Contact Waterford Medical Accountants professionals directly on (02) 4240 2800 for further information or further guidance.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.