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Edited version of your private ruling
Authorisation Number: 1012231487300
Ruling
Subject: GST and the supply of a particular drug (drug)
Question
Is a supply of a drug from a wholesaler to a pharmacist or medical practitioner subject to GST?
Answer:
Yes, the supply of a drug from a wholesaler to a pharmacist or medical practitioner is subject to GST.
Relevant facts and circumstances
§ You are registered for the goods and services tax (GST)
§ As a wholesaler, you supply a particular drug to pharmacists and medical practitioners
§ The drug is administered by injection or in tablet form
§ The drug is used either alone or in combination with other agents
§ A course of the drug is supplied over a period of weeks or months
A copy of the product information for drug has been supplied. While it is not clearly stated in the product information that the drug is a prescribed drug, there is a statement that the use of the drug should be 'prescribed' only if the patient can be adequately monitored. .
Reasons for decision
Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:
You make a taxable supply if:
(a) you make the supply for *consideration; and
(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST free or *input taxed.
* Denotes a term defined in subsection 195-1 of the GST Act
Based on the facts provided, we consider that your supply of the drug to pharmacists and medical practitioners satisfies paragraphs 9-5(a) - (d) of the GST Act.
Your supply of the drug is not an input taxed supply under any provision of the GST Act. However, it is necessary to consider whether it is a GST-free supply under any provision of the GST Act.
Section 38-50 of the GST Act refers to drugs and medicinal preparations etc.
Subsection 38-50(7) of the GST Act states:
A supply of a drug or medicinal preparation covered by this section is GST-free if, and only if:
(a) the drug or medicinal preparation is for human use or consumption; and
(b) the supply is to an individual for private or domestic use or consumption.
In this case, the drug you supply is for human use or consumption. However, the supply is not made to an individual for their private or domestic use or consumption. Therefore, the requirements of subsection 38-50(7) of the GST Act are not satisfied. Accordingly, your supply is not a GST-free supply under section 38-50 of the GST Act.
Therefore, your supply of the drug to pharmacists and medical practitioners satisfies the requirements of section 9-5 of the GST Act as a taxable supply and it is subject to GST.
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