Edited version of private advice

Authorisation Number: 1051583663068

Date of advice: 20 September 2019

Ruling

Subject: Goods and services tax (GST) and the importation of feeding tube formula and the meal replacement liquid food formula

Question

Is GST payable on the importation of feeding tube formula and the meal replacement liquid food formula ('Product') into Australia?

Answer

No. Your importation of the Product into Australia is a non-taxable importation under paragraph (b) of section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and you therefore will not be liable to pay GST on the importation of the Product.

Relevant facts and circumstances

You are a disabled person. Your nutrition is current wholly provided via a Gastrostomy PEG.

You have a life time medical condition and require the specialised meal replacement formula to sustain your life. There is no such formula available in Australia that is suitable for you. Therefore you import a feeding tube and meal replacement liquid formula Product from overseas.

The Product comes ready for consumption in a foil sachet. The product is warmed and diluted with cooled boiled tap water. You receive the Product via a Gastrostomy PEG button using gravity to the progress feed. The tube that is connected to your stomach attaches to the syringe which administers the feed at 100 ml of the Product 5 times a day.

You provided a letter dated 2 September from Paediatric Dietitian stating that you require a specialised nutrition via a Gastrostomy tube. She recommended you to take Product PEG feeding formula 500ml daily to meet your nutrition needs.

The Manufacture's website gives the history, ingredients and nutritional values of the Product. The Product is the world's first shelf stable organic whole foods feeding tube formula and oral meal replacement.

The Product is pretty thin and does not require straining. It should have no problem flowing through gastrostomy tubes. If using gastrojejunostomy and jejunostomy systems, some dilution may be required, please check with your healthcare provider.

Store unopened at ambient room temperatures for maximum shelf-life. Shake well prior to opening. The Product can be served as is, or water may be added to achieve desired consistency. Once opened, cover, refrigerate and use within 48 hours.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999, section 13-5

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 Schedule 3

Reasons for decisions

Subsection 7-1(1) of the GST Act provides that goods and services tax (GST) is payable on taxable supplies and taxable importations.

Taxable importation

Section 13-5 of the GST Act provides that an entity makes a taxable importation if:

(a)  goods are imported goods; and

(b)  the entity enters the goods for home consumption within the meaning of the Customs Act.

However, an importation is not a taxable importation to the extent that it is a non-taxable importation.

Goods and Services Tax Ruling GSTR 2003/15: 'importation of goods into Australia' provides guidance on taxable and non-taxable importations under Division 13 of the GST Act.

Paragraphs 30 and 31 of GSTR 2003/15 explain when imported goods are entered for home consumption within the meaning of the Customs Act and state:

30   Imported goods are entered for home consumption, within the meaning of the Customs Act, by an 'owner' as defined in that Act, entering imported goods for home consumption. The imported goods are entered by lodging an import entry in the name of the 'owner'.

31.  If you, as 'owner' lodge an import entry in your name, you enter imported goods for home consumption within the meaning of the Customs Act and you are liable to pay GST on that importation if the importation is a taxable importation.

From the information provided, paragraphs 13-5(a) and 13-5(b) of the GST Act are met as you are importing the Product for home consumption within the meaning of the Customs Act since you are the owner of the Product in the Import Declaration.

However, the importation of the Product is not a taxable importation to the extent that it is a non-taxable importation.

Non-taxable importation

Under subsection 13-10 of the GST Act, an importation is a non-taxable importation if it would have been a supply that was GST-free or input taxed if it had been a supply.

We need to determine whether the supply of the Product which you imported into Australia would be GST-free and/or input taxed.

Is the supply of the Products when made in Australia input taxed and/or GST-free?

The supply of Product is not input taxed under any provisions of the GST Act or any other legislation.

The next step is to determine whether the supply of the supply of Product 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 3of the GST Act (Schedule 3) or specified in the 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 40

Item 40 in the table in Schedule 3 of the GST Act lists 'enteral nutrition and associated delivery equipment'. The phrase 'enteral nutrition' is not defined in the GST Act or GST Regulations.

Generally, where a phrase is not defined in the relevant Act or regulations, it is usually interpreted in accordance with its ordinary meaning, unless it has a special or technical meaning.

Medical definition of 'enteral nutrition' is a way to provide food through a tube placed in the nose, the stomach, or the small intestine. A tube that goes through the skin into the stomach is called a gastrostomy. It may be placed there using a technique called percutaneous endoscopic gastrostomy. (PEG). Enteral nutritionis often called tube feeding.

Based on the information provided, you have a life time medical condition and requires the specialised meal replacement formula to sustain your life. The Product is a feeding tube and meal replacement nutrition formula. You receive the Product via a Gastrostomy PEG either with bolus enteral pump or gravity feed. Therefore, the Product satisfies the requirements of Item 40. Accordingly, the Product satisfies first requirements in subsection 38-45(1) of the GST Act

The Product is specially designed for the people suffering from conditions that require tube feed and are under medical supervision for these conditions. The Product is not widely used by people without an illness or disability.

Accordingly, the Product also satisfies second and the third requirements in subsection 38-45(1) of the GST Act.

As all the requirements in subsection 38-45(1) of the GST Act are satisfied, the supply of the Product is GST-free under section 38-45 of the GST Act.

Accordingly, your importation of the Product is a non-taxable importation under paragraph (b) of section 13-10 of the GST Act and therefore you will not be liable to pay GST on the importation of the Product.