Dental Accounting and GST on Goods and Services Supplied by Dental Prosthetists and Technicians to Dentist

New Dental Accounting Advice

The ATO has recently released a class ruling 2011/58 which addresses whether GST is payable on goods supplied by dental technicians to dentists.

Dental services supplied to patients are GST free under subsection 38-10(1). However, some dental technicians have been of the belief that this also applies to them. This class ruling identifies that as dental technicians are not making a supply to a patient, but rather the dentists business, that the supply is often not GST free. This is because they are restricted by State legislation to make the supply directly to the patient.

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.

An extract of the relevant ruling is below.

Supplies of services to patients

  1. Supplies of dental services by a dental prosthetist to a patient, that is generally accepted in the dental profession as being necessary for the appropriate treatment of that patient, is GST-free under subsection 38-10(1) (see paragraphs 35 to 51 of this Class Ruling).

Supplies of goods to patients (goods other than medical aids and appliances covered by Schedule 3 to the GST Act)

  1. Supplies of goods to a patient in the course of supplying that patient a GST-free dental service (including a dental prosthetist service) under subsection 38-10(1) is also GST-free under subsection 38-10(3) if the supply is made at the premises at which the GST-free service is supplied (see paragraphs 61 to 63 of this Class Ruling).

Supplies of services to third parties

  1. Supplies of dental services by a dental prosthetist to a third party (that is a person or a business that is not the patient) are not GST-free under subsection 38-10(1) as they are not for the appropriate treatment of the patient. They will be making a supply to a third party where the third party, rather than the patient, has contracted them for the supply (see paragraphs 49 to 51 and 53 to 60 of this Class Ruling).

Supplies made by dental technicians under section 38-10

  1. Supplies made by dental technicians are not GST-free under section 38-10. Dental technicians are restricted by the relevant State or Territory legislation from providing services directly to patients. As such, they only make supplies to other business entities and those supplies would not be the appropriate treatment of the recipient of the supply, that is, a patient as is required by paragraph 38-10(1)(c) ( see paragraphs 49 to 51 of this Class Ruling).

Supplies of medical aids and appliances

Supplies of medical aids and appliances used in the dental industry

  1. 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. 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 (see paragraphs 64 to 75 of this Class Ruling).

Supplies of specifically designed spare parts for medical aids and appliances

  1. The supply of a specifically designed spare part for a GST-free medical aid or appliance ('customised toothbrushes for people with disabilities', 'dentures and artificial teeth', and 'mandibular advancement splints') is GST-free under subsection 38-45(2). This will include labour services where it is merely incidental to the supply of the specifically designed spare part.
  2. However, specifically designed spare parts will not be GST-free where they are merely incidental to a supply of labour services.
  3. If the specifically designed spare part or the labour is not incidental to the other, the specifically designed spare part will be GST-free and the labour services will be taxable (see paragraphs 76 to 90 of this Class Ruling).
  4. Generic spare parts that are not specifically designed for a GST-free medical aid or appliance are not GST-free. They are treated in the same way as labour services (see ATO ID 2001/216).

Supplies of repairs of medical aids and appliances

  1. A repair of a medical aid or appliance is only GST-free where it is the supply of specifically designed spare parts for a GST-free medical aid or appliance (see paragraphs 80 to 90 of this Class Ruling).

Supplies of modifications of medical aids and appliances

  1. The supply by a dental prosthetist to a patient of a modification to a denture or other appliance undertaken for the changing condition of the patient is GST-free under subsection 38-10(1) (see paragraph 47 of this Class Ruling).
  2. The supply of a modification to a denture by a dental technician is only GST-free to the extent that a specifically designed spare part would be GST-free under subsection 38-45(2) (see paragraphs 76 to 90 of this Class Ruling).

Contact professional dental accountants in Caulfield, Hillyer Riches directly on (03) 9571 5333 for further information.

 

 

Disclaimer:

Hillyer Riches Management Pty Ltd is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

 

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