Edited version of private advice

Authorisation Number: 1052306716158

Date of advice: 17 September 2024

Ruling

Subject: GST - free health goods

Question

Is your supply of the products GST-free under subsection 38-47(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. Your supply of the products is GST-free supplies under subsection 38-47(1) of the GST Act.

This ruling applies for the following period:

17 September 2024 to 16 September 2028

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You are the distributer of personal lubricants in Australia.

The products are water soluble.

The products are suitable for use with condoms.

You resell the products from overseas manufacturers.

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 38-47(1)

A New Tax System (Goods and Services Tax) GST-free Supply (Health Goods) Determination 2022

Reasons for decision

Under section 9-5 of the GST Act, you make a taxable supply if:

(a) You make a 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 the indirect tax zone; 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.

There are no provisions in the GST Act under which your sale of the products input taxed.

We considered whether your sale of the products may be GST-free under subsection 38-45(1) of the GST Act.

Other GST-free health goods

Division 38 of the GST Act sets out those supplies that are GST-free. Relevantly, subsection 38-47(1) of the GST Act provides that:

(1)  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

(2)  However, a supply is not GST-free if the supplier and the recipient have agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

You and the recipients of the products have not agreed that the supply, or supplies of a kind that include that supply, not be treated as GST-free supplies.

The Determination provides that for the purposes of subsection 38-47(1) of the Act, goods of a kind that are:

(a)  specified in an item of the table in Schedule 1; and

(b)  required, or in a class of goods required, to be included in the Australian Register of Therapeutic Goods under the Therapeutic Goods Act 1989;

are declared to be goods the supply of which is GST-free.

Item 3 in the table to Schedule 1 to the Determination specifies as health goods:

Personal and surgical lubricants that:

(a)  are water-soluble; and

(b)  are suitable for use with condoms

Water solubility

The products are water soluble.

On this basis, the requirement that the products are water soluble per Item 3 of Schedule 1 of the Determination is satisfied.

Suitable for use with condoms

The Oxford Advanced Learner's Dictionary defines the term "suitable" as "right or appropriate for a particular purpose or occasion" and the term "compatible" as "able to exist or be used together without causing problems".

Where an item is 'compatible', in terms of the ordinary meaning, it will also be 'suitable for use with' another product. The packaging descriptions for the products describes each as being compatible with condoms. On this basis, the requirement that the products are suitable for use with condoms per Item 3 of Schedule 1 of the Determination is satisfied.

Australian Register of Therapeutic Goods

As each product is registered in the Australian Register of Therapeutic Goods under the Therapeutic Goods Act 1989 the requirement under paragraph (b) of the Determination is met.

In summary

As the requirements under subsection 38-47(1) are met, the supply of the products is GST-free.