Edited version of your private ruling

Authorisation Number: 1012518269317

Ruling

Subject: GST and the importation of a product

Questions

Is the importation of a product a non-taxable importation under section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Is the supply of a product to individuals a GST-free supply under the GST Act?

Decisions

No, the importation of a product is not a non-taxable importation under section 13-10 of the GST Act. The importation is a taxable importation under section 13-5 of the GST Act.

No, the supply of a product to individuals is not a GST-free supply under the GST Act. The supply is a taxable supply under section 9-5 of the GST Act.

Relevant facts:

You are registered for goods and services tax (GST). You import and supply a product.

The product does not need to be provided on prescription.

The product is registered as a medical device on the Therapeutic Goods Act 1989 (TGA) register.

Section 41BA of the TGA provides that all TGA registered medical devices adhere to the Essential Principles. General Principle 1 of the Essential Principles checklist states that the use of medical devices is not to compromise health and safety, this includes that the device will not compromise the clinical condition or safety of a patient, or the safety and health of the user or any other person, when the device is used on a patient under the conditions and for the purposes for which the device was intended and, if applicable, by a user with appropriate technical knowledge, experience, education or training.

The product is not subject to an approval under paragraph 19(1)(a) of the TGA nor is it supplied under an authority under subsection 19(5) of the TGA nor is it exempted from the operation of Part 3 of the TGA under regulation 12A of the Therapeutic Goods Regulations 1990.

The product is to be administered by an authorised physician.

The product is usually supplied to the patient but it has to be sent to the appropriate physician and is never provided directly to the patient.

Relevant legislative provisions:

A New Tax System (Goods and Services Tax) Act 1999 Section 13-10

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

Reasons for decisions

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 of the GST Act, or

· it would have been a supply that was GST-free or input taxed if it had been a supply.

To determine if the supply of the product is GST-free if it is a supply made in Australia, it is necessary to examine subsection 38-45(1) of the GST Act and section 38-50 of the GST Act.

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 37 in the table in Schedule 3 (Item 37) lists 'needles and syringes'. The product is supplied in a syringe, however the syringe is merely for packaging and the mechanism by which the substance is administered. The product or any of its ingredients is not covered by Item 37 nor is it covered by any other item in Schedule 3 or the GST Regulations. As such, the supply of the product is not GST-free under subsection 38-45(1) of the GST Act.

Note: we do not consider that the supply of the product is a mixed supply as the syringe is ancillary to the supply of the product itself.

Section 38-50 of the GST Act outlines the circumstances in which the supply of a drug or medicinal preparation is GST-free. Subsection 38-50(7) of the GST Act provides that a supply of a drug or medicinal preparation covered by section 38-50 of the GST Act is GST-free, if and only if:

· the drug or medicinal preparation is for human use or consumption, and

· the supply is to an individual for private or domestic consumption.

Additionally, to be GST-free under section 38-50 of the GST Act, the supply also must be covered by one of the subsections from 38-50(1) to 38-50(6) of the GST Act

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

(1) 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).

Paragraph (a) above covers drugs or medicines specified in Schedules 4 or 8 of the SUSMP that are only available on prescription. Many of these products were formerly labelled 'S4' and 'S8' medications. From the 1 July 2000 it is compulsory to label these products as 'Prescription Medicine' and 'Controlled Drugs', respectively. These include such things as medications for arthritis or for the treatment of depression.

Paragraph (b) above covers Pharmaceutical Benefits Scheme (PBS) drugs and medicines supplied on prescription as a pharmaceutical benefit within the meaning of Part VII of the National Health Act.

The product is not restricted under a State or Territory law, it is not a PBS drug or medicine and it is not supplied on prescription. As such, subsection 38-50(1) of the GST Act is not satisfied.

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

(1) 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.

This covers drugs and medicines that can only be supplied by a medical practitioner, dental practitioner or pharmacist. Many of these products were formally labelled S2 and S3 medications. As at 1 July 2000 it is compulsory to label these products as 'Pharmacy Medicine' and 'Pharmacy Only Medicine', respectively.

The product is not restricted under a State or Territory law and as such, subsection 38-50(2) of the GST Act is not satisfied. There are no other subsections in section 38-50 of the GST Act that are relevant. Therefore, the supply of the product is not GST-free under section 38-50 of the GST Act.

There are no other provisions in Division 38 of the GST Act that make the supply of the product GST-free. The product is supplied for consideration in the course or furtherance of an enterprise that is carried on in Australia and as such, all the requirements for a taxable supply in section 9-5 of the GST Act are satisfied. Therefore, the supply of the product is a taxable supply. Consequently, the importation of the product is also a taxable importation under section 13-5 of the GST Act.