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Edited version of your written advice
Authorisation Number: 1013107514004
Disclaimer
You cannot rely on this edited version in your tax affairs. You can only rely on the advice that we have given to you or to someone acting on your behalf.
The advice in the Register has been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict ATO policy or decisions.
Date of advice: 13 October 2016
Ruling
Subject: GST and a supply of a Product
Question
Is a supply of a Product by an Australian entity (you) in Australia GST-free under subsection
38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, the supply of the Product is not GST-free under subsection 38-45(1) of the GST Act. The supply is a taxable supply under section 9-5 of the GST Act.
Relevant facts and circumstances
• You are an Australian entity which is registered for GST.
• You supply a Product to customers in Australia.
• You purchase and import the Product directly from an overseas manufacturer and on-sell it to clients in Australia.
• The Product is marketed to general hospitals, clinics and pharmacies.
• The Product is specially designed and marketed by the manufacturer for use in dispensing liquid doses for patients with chronic pain conditions and opiate additions.
• The Product is used by medical professionals such as doctors and nurses to measure liquid doses of the medicine which is given to the patients by mouth. The Product is not used to give medicine intravenously.
• The Product cannot be self-administered by the patient. The patients need help of medical professionals to use the Product.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-45(1)
A New Tax System (Goods and Services Tax) Act 1999 Section 38-50
A New Tax System (Goods and Services Tax) Act 1999 Schedule Sch3
A New Tax System (Goods and Services Tax) Regulations 1999
Reasons for decision
Issue 1
GST is payable on a taxable supply. You make a taxable supply if all the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are satisfied as follows:
(a) you make the supply for consideration;
(b) the supply is made in the course or furtherance of an enterprise that you carry on;
(c) the supply is connected with the indirect tax zone (Australia), and
(d) you are registered or required to be registered.
However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.
From the facts provided, you satisfy the requirements of a taxable supply under paragraphs 9-5(a) to 9-5(d) of the GST Act as follows:
(a) you supply the Product in return for consideration by way of payments;
(b) the supply is made in the course of an enterprise (business) that you carry on;
(c) the supply is connected with Australia as you are carrying on your enterprise in Australia; and
(d) you are registered for GST.
The supply of the Product to customers in Australia is not input taxed under any provisions of the GST Act or any other legislation.
The next step is to determine whether the supply is GST-free.
GST-free
Under subsection 38-45(1) of the GST Act, a supply of a medical aid or appliance is GST-free if:
• it is covered by Schedule 3 to the GST Act (Schedule 3) or specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)
• it is specifically designed for people with an illness or disability, and
• it is not widely used by people without an illness or disability.
Item 109 syringe drivers
Item 109 in the table in Schedule 3 to the GST Regulations (Item 109) lists patient syringe drives under the general category of pain relief systems. A syringe driver is a small, portable battery operated device that administers medicines subcutaneously over a selected time *period, usually 24 hours. Medicines are drawn up into a syringe that is then attached to the driver, which is set to move the plunger of the syringe forward at an accurately controlled rate.
Based on the information provided, we consider that the Product is not a syringe driver as it does not administer medicines subcutaneously over a selected time period. Therefore the Product is not GST-free under item 109.
Item 110, patient control analgesia
Item 110 in the table in Schedule 3 to the GST Regulations (Item 110) lists patient controlled analgesia'. The term 'patient controlled analgesia' means a device containing pain relief medication which can be self-administered by the patient. The system is operated by the patient and normally has inbuilt limits to ensure that the doses cannot be provided too close together and cannot exceed a certain amount within a specified period. When the patient feels pain, they press a button to inject the medicine through an Intravenous (IV) tube into their veins.
Based on the information provided, the Product cannot be self-administered by the patient and is not patient controlled analgesia. Therefore the Product is not GST-free under item 110.
There are no other provisions in Division 38 of the GST Act that make the supply of the Product GST-free. You supply the Product for consideration in the course or furtherance of an enterprise that you carry on in Australia and as such, all the requirements for a taxable supply in section 9-5 of the GST Act are satisfied. Therefore, your supply of the Product is a taxable supply and GST is payable on the supply.
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