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Ruling

Subject: GST and supply of cosmetic treatment

Questions

1. What is the goods and services tax (GST) status of the supply of cosmetic treatment to private individuals by an Australian entity?

2. If the injection of the botox is not billed separately how do you account for this supply in the tax invoice?

Advice

1. The supply of cosmetic treatment to private individuals by the Australian entity is a GST-free supply.

2. As discussed above, the supply of cosmetic treatment is GST-free and therefore your tax invoice will indicate that no GST has been charged for this supply.

Relevant facts

You are a registered medical practitioner and supplies cosmetic treatment to private individuals that involve the supply and injection of botox at the same time.

The botox supplied during the treatment is included in Schedule 4 of the 'Standard for the uniform Scheduling of Drugs and Poisons' (SUSDP) and can only be supplied to medical practitioners.

The private individuals select the treatment they would like to have and are charged a specific single fee for the selected treatment. The fee for the cosmetic treatment is calculated on the amount of botox injected. No payment is received for the injection of the botox. A Medicare benefit is not payable for this cosmetic treatment.

The individuals cannot purchase the botox only.

You are registered for GST.

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 Section 38-50;

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-50(2); and.

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-50(7).

Reasons for decisions

Question 1

Characterisation of the supply

A supply may be characterised as consisting of one or more things or parts. A mixed supply is a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised.

From the information received, the cosmetic treatments consists of two parts, one part being the supply of the botox by you to the individual and the other part being the supply of a medical service (injection of the botox) by you to the individual.

Accordingly, you are making two distinct supplies which are:

o a supply of botox; and

o a supply of medical service.

The next step is to determine the GST status of these two supplies.

GST status of the supplies

You pay GST if you make a taxable supply. A supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if:

o you make the supply for consideration;

o the supply is made in the course of an enterprise that you carry on;

o the supply is connected with Australia; and

o you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

All the requirements in section 9-5 of the GST Act must be satisfied for a supply to be a taxable supply.

Supply of botox

You satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act when you supply the botox to the individuals as:

· you charge the individuals a fee for the supply of the botox;

· the supply of the botox is made in the course of an enterprise (business) that you carry on;

· the supply is connected with Australia as the botox is supplied to the individuals in Australia; and

· you are registered for GST.

However, the supply of the botox is not a taxable supply to the extent that it is GST-free or input taxed.

There is no provision in the GST Act that makes your supply of botox input taxed. The next step is to consider whether your supply of botox is GST-free.

GST-free

Relevant to the supply of botox is section 38-50 of the GST Act which outlines the circumstances in which the supply of a drug or medicinal preparation will be GST-free.

The supply of the botox will be GST-free where:

· it first satisfies the requirements in subsection 38-50(7) of the GST Act, and

· satisfies the requirements contained in at least one of subsections 38-50(1), 38-50(2), 38-50(4), 38-50(5) or 38-50(6) of the GST Act.

Subsection 38-50(7) of the GST Act provides that a supply of a drug or medicinal preparation is GST-free 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.

· In this case you satisfy the requirements in subsection 38-50(7) of the GST Act as:

· the botox is a drug and is for a human use; and

· the supply of the drug is made to an individual for private use or consumption (beauty treatment).

Subsection 38-50(2) of the GST Act provides that 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 product to an individual for private or domestic use or consumption is restricted, but may be made by:

· a medical practitioner, dental practitioner, or pharmacist; or

· any other person permitted by or under that law to do so.

An item listed in Schedule 4 of the SUSDP (restricted drug) is covered by this subsection if supplied by a medical practitioner. In this instance, botox is listed in Schedule 4 of the SUSDP and therefore, your supply of the botox to the individual in the course of the cosmetic procedure satisfies paragraph 38-50(2)(a) of the GST Act.

Accordingly, your supply of the botox to the individual is a GST-free supply.

Supply of medical service

From the information received, you do not receive any payment (consideration) for the injection of the botox to the individual. You therefore do not satisfy the requirement of paragraph 9-5(a) of the GST Act.

Accordingly, all the requirements in section 9-5 of the GST Act are not satisfied and GST is therefore not applicable to your supply of medical service to the individual.

Summary

When you supply cosmetic treatment to private individuals you are making a supply of botox and a supply of medical service to the individuals.

Your supply of botox is GST-free under section 38-50 of the GST Act and GST is not applicable to your supply of medical service.

Accordingly, your supply of cosmetic treatment to the private individuals is GST-free.

Question 2

As discussed in question 1 your supply of cosmetic treatment is GST-free and therefore your tax invoice will indicate that no GST has been paid for this supply.

How to set out the information on your tax invoice is a business decision. The fact sheet 'How to set out tax invoices and invoices' may be of assistance to you and is available at www.ato.gov.au