ATO Interpretative Decision
ATO ID 2003/1122
Goods and Services Tax
GST and the importation of drugs for use in treating a patientFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, a medical practitioner, 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 a drug for use in treating a patient?
Decision
No, the entity is not making a non-taxable importation under section 13-10 of the GST Act when it imports a drug for use in treating a patient. The entity is making a taxable importation under section 13-5 of the GST Act.
Facts
The entity is a medical practitioner. The entity imports a drug for use in treating a patient.
The drugs are not non-taxable importations under Part 3-2 of the GST Act.
The entity is registered for goods and services tax (GST). 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.
Under section 38-50 of the GST Act, a supply of certain drugs and medicinal preparations are GST-free.
However, a supply of a drug or medicinal preparation is only GST-free under section 38-50 of the GST Act if:
- •
- the drug or medicinal preparation is for human use or consumption; and
- •
- the supply is to an individual for private or domestic use or consumption (subsection 38-50(7) of the GST Act).
While the drugs imported by the entity, may be drugs which are for human use or consumption, it is necessary to determine whether the supply is to an individual for private or domestic use or consumption.
The drugs are being imported by the entity to be used in the carrying on of its enterprise. The entity is not importing the drugs for its own private or domestic use.
Therefore, if there had been a supply to the entity (instead of an importation by the entity), the supply would not be GST-free under section 38-50 of the GST Act. Furthermore, if there had been a supply to the entity, the supply would not be GST-free under any other provision in Division 38 of the GST Act nor would it be input taxed under Division 40 of the GST Act. Therefore, the importation is not a non-taxable importation under section 13-10 of the GST Act.
As such, the entity is making a taxable importation under section 13-5 of the GST Act when it imports drug for use in treating a patient.
Date of decision: 31 October 2003
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 13-5
section 13-10
Division 38
section 38-50
subsection 38-50(7)
Division 40
Part 3-2
Table of contents ATO Interpretative Decisions overturned by this decision
ATO ID 2001/484
Keywords
Goods and services tax
GST-free
GST health
Section 38-50 - drugs & medicinal preparations
Non-taxable importations
Taxable importations
ISSN: 1445-2782
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
