ATO Interpretative Decision

ATO ID 2001/656

Goods and Services Tax

GST and the importation of insulin
FOI status: may be released

With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the GST, Luxury Car Tax and Wine Equalisation Tax legislation with the term 'indirect tax zone' by the Treasury Legislation Amendment (Repeal Day) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts. For readability and other reasons, where the term 'Australia' is used in this document, it is referring to the 'indirect tax zone' as defined in subsection 195-1 of the GST Act.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, an individual, making a non-taxable importation under section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it imports insulin for its own private use?

Decision

Yes, the entity is making a non-taxable importation under section 13-10 of the GST Act when it imports insulin for its own private use.

Facts

The entity is an individual. The entity visited Australia for business purposes. At the overseas departure point, the entity's hand luggage, including a personal supply of insulin, was misplaced. Once the luggage was located, it was sent to the entity in Australia by courier.

Insulin is a drug for human use. The supply of insulin in Australia to individuals for private use is restricted under State and Territory laws such that it can only be made by a pharmacist, medical practitioner, dental practitioner or any other person permitted under that law to do so.

The importation of insulin is not a non-taxable importation under Part 3-2 of the GST Act.

The goods are imported and are entered for home consumption within the meaning of the Customs Act 1901.

Reasons for Decision

Under section 13-10 of the GST Act, an importation is a non-taxable importation if:

•: it is a non-taxable importation under Part 3-2; or
•: it would have been a supply that was GST-free or input taxed if it had been a supply.

As the importation is not a non-taxable importation under Part 3-2 of the GST Act, it is necessary to determine if, had it been a supply, it would have been GST-free or input taxed.

Section 38-50 of the GST Act outlines the circumstances in which the supply of a drug or medicinal preparation is GST-free. Subsection 38-50(7) of the GST Act provides that a supply of a drug or medicinal preparation covered by section 38-50 of the GST Act is GST-free if, and only if:

•: the drug or medicinal preparation is for human use or consumption; and
•: the supply is to an individual for private or domestic consumption.

In this case, the supply of insulin to an individual for its own private use satisfies the requirements of subsection 38-50(7) of the GST Act. Therefore, section 38-50 of the GST Act may apply to make the supply of insulin GST-free.

Subsection 38-50(2) of the GST Act provides that a supply of a drug or medicinal preparation is GST-free if the supply is to an individual for private or domestic use or consumption and is restricted under a State or Territory law in which it is supplied, but may be made by a medical practitioner, dental practitioner, pharmacist or any other person permitted by or under that law to do so. The focus of subsection 38-50(2) of the GST Act is the drug or medicinal preparation itself and not who is actually supplying it.

The supply of insulin in Australia to individuals for private use is restricted under State and Territory laws such that it can only be made by a pharmacist, medical practitioner, dental practitioner or any other person permitted under that law to do so. Therefore, the supply of insulin satisfies subsection 38-50(2) of the GST Act. As such, the supply of insulin to an individual for private use is GST-free under section 38-50 of the GST Act.

Therefore, as the supply of insulin would have been GST-free under section 38-50 of the GST Act if the supply had been made in Australia, the entity is making a non-taxable importation under section 13-10 of the GST Act when it imports insulin for its own private use.

Date of decision: 7 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 13-10
   section 38-50
   subsection 38-50(2)
   subsection 38-50(7)

National Health Act 1953
Part VII

Customs Act 1901
section 1

Keywords
Goods & services tax
GST-free
GST health
Section 38-50 - drugs and medicinal preparations
Imports
Non-taxable importations

Siebel/TDMS Reference Number: CW224780

Business Line: Indirect Tax

Date of publication: 30 November 2001

ISSN: 1445-2782

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