• Business norms percentages No. 6 - pharmacies

    Am I an eligible pharmacy operator with dispensary sales?



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    You may be eligible to use the business norms percentages to estimate your GST-free sales and purchases if you operate a pharmacy with:

    • dispensary sales (for example claimable NHS prescriptions)
    • non-claimable private prescriptions and over-the-counter (OTC) sales, including food sales, and
    • a net simplified GST accounting methods (SAM) turnover of $2 million or less after deducting dispensary sales of claimable NHS prescriptions, including any patient contributions.

    Your pharmacy must also:

    • be registered for GST
    • not have adequate point-of-sale equipment to identify and record your OTC mix of taxable and GST-free sales, even if your dispensary systems (with your shopfront point-of-sale equipment) can identify and record your dispensary sales (for claimable NHS prescription), and
    • sell taxable and GST-free food from the same premises.

    If you meet all of the eligibility requirements, you can use the business norms percentages to estimate your GST-free sales and purchases at the end of each tax period, rather than having to record every transaction at the point of sale.

    Before applying the business norms percentages you must:

    • deduct the patient contribution for claimable NHS prescriptions from your total amount of sales (that your shopfront point-of-sale equipment has recorded)
    • identify the non-claimable dispensary and OTC components of your sales, and
    • apply the relevant business norms percentages to each component.

    These figures, plus the total of your claimable dispensary sales, will give you your total GST-free sales.

    Pharmacy business norms percentages

    Dispensary: non-claimable

    • GST-free sales - 98%
    • GST-free purchases - 0%

    Over the counter

    • GST-free sales - 47.5%
    • GST-free purchases - 2%

    Your dispensary sales of claimable NHS prescriptions, including any patient contributions, should be included in total sales at box G1 of your activity statement. All claimable NHS dispensary sales are GST-free, while all purchases of dispensary items (both claimable and non-claimable) are taxable.

    If you do not want to use the business norms simplified accounting method, you can use the stock purchases simplified accounting method or the snapshot simplified accounting method. Under these methods, you look at your non-claimable dispensary and the OTC purchases and sales to estimate your GST-free purchases and sales from these sources.

    If you do not want to use any of the simplified accounting methods you must work out the amount of GST you are liable to pay by accounting for each of your transactions.

    More information

    For more information refer to:

    To obtain this information:

    • phone 13 28 66, or
    • write to us at
      Australian Taxation Office
      PO Box 3524
      ALBURY  NSW  2640.

    If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call. If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.

      Last modified: 30 Jun 2010QC 16270