Edited version of your written advice

Authorisation Number: 1012734763649

Ruling

Subject: Goods and services tax (GST) and specific tablets

Question

Will GST be payable on your sale of the specific tablets?

Answer

GST will be payable on your sale of the specific tablets where you supply them to customers in Australia.

However, where your customer is overseas, GST will not be payable on your sale of the tablets provided that you export them from Australia before, or within 60 days (or such further period as the Commissioner allows) after, the earlier of the following dates:

• the date you receive any part of the price; and

• the date you issue the invoice.

Relevant facts and circumstances

You are registered for GST.

You will sell tablets that will be consumed by people to help them quit their addiction. The tablet's aim is to stop cravings.

You will sell the tablets to the end consumer.

You will supply the tablets wholly within Australia. You will also export the tablets from Australia to customers overseas.

The tablets contain certain ingredients. The tablet does not contain folic acid or nicotine.

The tablets are delivered oromucossally (gingivally).

The tablets are not required to be included in the Australian Register of Therapeutic Goods and are not in a class of goods required to be included in the Australian Register of Therapeutic Goods.

There are no State and Territory laws that restrict the supply of the tablets in the States and Territories in which the tablets will be supplied.

No prescription will be required to obtain the tablets.

The tablets are not a pharmaceutical benefit with the meaning of the Part VII of the National Health Act 1953.

The tablets will not be supplied as a pharmaceutical benefit within the meaning of section 91 of the Veterans' Entitlements Act 1986.

The medication will not be supplied as a pharmaceutical benefit within the meaning of section 5 of the Military Rehabilitation and Compensation Act 2004.

The tablets are not the subject of an approval under paragraph 19(1)(a) of the Therapeutic Goods Act 1989?

The tablets will not be supplied under an authority under subsection 19(5) of the Therapeutic Goods Act 1989?

The tablets are not exempted from the operation of Part 3 of the Therapeutic Goods Act 1989 under regulation 12A of the Therapeutic Goods Regulations.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 38-47

A New Tax System (Goods and Services Tax) Act 1999 section 38-50

A New Tax System (Goods and Services Tax) Act 1999 section 38-185

Reasons for decision

Summary

Your sale of the tablets is not GST-free under the medicinal or health exemptions.

Your sale of the tablets to an overseas customer is GST-free under the export exemption provided that you export them from Australia within a certain timeframe.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which 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 section 195-1 of the GST Act)

You will meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

• you will supply the tablet for consideration

• you will supply the tablets in the course or furtherance of an enterprise that you carry on

• these supplies will be connected with Australia, and

• you are registered for GST.

There are no provisions of the GST Act under which your sales of the tablet will be input taxed.

Therefore, what remains to be determined is whether your sales of the tablet will be GST-free.

Subsection 38-47(1) of the GST Act states:

A supply is GST-free if it is a supply of goods of a kind that the *Health Minister, by determination in writing, declares to be goods, the supply of which is GST-free.

The GST-free Supply (Health Goods) Determination 2011 for the purposes of section 38-47 of GST Act provides that the following categories of goods will be GST-free where the goods are required to be included in the Australian Register of Therapeutic Goods, or are goods in a class of goods required to be included in the Australian Register of Therapeutic Goods:

• Condoms

• Barrier dams, femidoms and harness devices

• Personal and surgical lubricants:

• that are water-soluble; and

• that are suitable for use with condoms.

• Preparations for use by humans:

• that contain folic acid as a single active ingredient; and

• have a recommended daily dose of 400 to 500 micrograms.

• Sunscreen preparations for dermal application that:

• are marketed principally for use as sunscreen; and

• have a sun protection factor rating of 15 or more.

• Nicotine for use as an aid in withdrawal from tobacco smoking where the nicotine is administered in preparations for transdermal or oromucosal use.

The only item of relevance in this determination is for use as an aid in withdrawal from an addictive substance where it is administered in preparations for transdermal or oromucosal use. Your tablet is an aid in withdrawal from a substance and is delivered oromucosally (gingivally). However, it does not contain the particular substance and the tablet is not required to be included in the Australian Register of Therapeutic Goods. It is not in a class of goods required to be included in the Australian Register of Therapeutic Goods. Therefore, your product is not a category of goods listed in the determination.

Hence, your sale of the tablet is not GST-free under section 38-47 of the GST Act.

Subsection 38-50(1) of the GST Act states:

A supply of a drug or medicinal preparation is GST-free if the

supply is on prescription and:

(a) under a *State law or a *Territory law in the State or Territory

in which the supply takes place, supply of the drug or

medicinal preparation is restricted, but may be supplied on

prescription; or

(b) the drug or medicinal preparation is a pharmaceutical benefit

(within the meaning of Part VII of the National Health Act

1953).

You do not meet the requirements of subsection 38-50(1) of the GST Act. Therefore, you do not make GST-free supplies under that provision.

Subsection 38-50(2) of the GST Act states:

A supply of a drug or medicinal preparation is GST-free if, under a

*State law or a *Territory law in the State or Territory in which it is

supplied, the supply of the drug or medicinal preparation to an

individual for private or domestic use or consumption is restricted

but may be made by:

(a) a *medical practitioner, dental practitioner or pharmacist; or

(b) any other person permitted by or under that law to do so.

You do not meet the requirements of subsection 38-50(2) of the GST Act. Therefore, you do not make GST-free supplies under that provision.

Subsection 38-50(4) of the GST Act states:

A supply of a drug, medicine or pharmaceutical item is GST-free

if the supply is on prescription and:

(a) It is supplied as a pharmaceutical benefit (within the meaning

of section 91 of the Veterans' Entitlements Act 1986); and

(b) it is supplied under an approved scheme (within the meaning

of that section).

You do not meet the requirements of subsection 38-50(4) of the GST Act. Therefore, you do not make GST-free supplies under that provision.

Subsection 38-50(4A) of the GST Act states:

A supply of a drug, medicine or pharmaceutical item is GST-free

if the supply is on prescription and:

(a) It is supplied as a pharmaceutical benefit (within the meaning

of section 5 of the Military Rehabilitation and Compensation

Act 2004); and

(b) it is supplied in accordance with a determination made under

paragraph 286(1)(c) of that Act.

You do not meet the requirements of subsection 38-50(4) of the GST Act. Therefore, you do not make GST-free supplies under that provision.

Subsection 38-50(6) of the GST Act states:

A supply of a drug or medicinal preparation is GST-free if:

(a) the drug or medicinal preparation is the subject of an approval

under paragraph 19(1)(a) of the Therapeutic Goods Act 1989,

and any conditions to which the approval is subject have been

complied with; or

(b) the drug or medicinal preparation is supplied under an

authority under subsection 19(5) of that Act, and the supply is

in accordance with any regulations made for the purposes of

subsection 19(7) of that Act; or

(c) the drug or medicinal preparation is exempted from the

operation of Part 3 of that Act under regulation 12A of the

Therapeutic Goods Regulations.

You do not meet the requirements of subsection 38-50(6) of the GST Act. Therefore, you do not make GST-free supplies under that provision.

Item 1 in the table in subsection 38-185(1) of the GST Act provides that a sale of goods is GST-free if the supplier exports them from Australia before, or within 60 days (or such further period as the Commissioner allows) after the earlier of the following:

• the date the supplier receive any part of the price,

• the date the supplier issues an invoice.

Your sale of the tablet will be GST-free under section 38-185 of the GST Act where you export it before, or within 60 days (or such further period as the Commissioner allows) after, the earlier of the following dates:

• the date you receive any part of the price; and

• the date you issue the invoice.

There are no other provisions of the GST Act under which your sales of the product are GST-free.

Therefore, where you supply the tablets wholly within Australia, GST would be payable on the sale as all of the requirements of section 9-5 of the GST Act would be met. However, where you export the tablets from Australia within the time-frame set out in section 38-185 of the GST Act, GST will not be payable on the sale.

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