GST Pharmaceutical Health Forum - issues register

4.a. Are goods supplied free to retailers as incentive stock, subject to GST? For example, if a pharmaceutical distributor runs a promotional campaign in which 20 'bonus' products are given to Pharmacists who achieve their monthly sales targets.

Non-interpretative - straight application of the law.

Subsection 9-10(2) provides that a supply includes an entry into, or release from, an obligation:

a. to do anything; or

b. to refrain from an act; or

c. to tolerate an act or situation.

It is considered that where a Pharmaceutical Distributor runs a promotional campaign in which 20 'bonus' products are given to a Pharmacist for achieving their monthly sales targets, the 20 products represent consideration for a supply made by the Pharmacist to the Pharmaceutical Distributor for entering into an obligation to promptly turnover stock.

That is, the 20 'bonus' products are supplied on condition and in consideration for the Pharmacist entering into an obligation to promptly turnover stock and will be subject to GST.

It is important to note that in determining whether GST applies to goods supplied as incentive stock, each case is determined on its merits.

Sections within Issue 4. General questions

• 4.a. Are goods supplied free to retailers as incentive stock, subject to GST? For example, if a pharmaceutical distributor runs a promotional campaign in which 20 'bonus' products are given to Pharmacists who achieve their monthly sales targets.
• 4.b. Under the rules of statutory interpretation, where two specific sections made a supply GST-free, which section applies?
• 4.c. The Therapeutic Goods Regulations 1990 require that packs which contain a 'Pharmacy only' scheduled medicine and an unscheduled medicine be packaged and labelled as a 'Pharmacy only' medicine. Will supplies of the pack be GST-free?
• 4.d. Are payments under the Medicines Information to Consumers program, Home Medicines Review program, Quality Care Pharmacy Program, Barcode Reader Cost Reimbursement Program and payments of Rural Pharmacy Maintenance Allowance, Start up Allowance, Succession Allowance and Training Incentive Payments for Pharmacy Assistants consideration for a taxable supply?