ATO ID 2003/1122: GST and the importation of drugs for use in treating a patient
Date of decision: 31 October 2003
Business line: Indirect Tax

Issue
Is the entity, a medical practitioner, making a non-taxable importation under section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it imports a drug for use in treating a patient?

Decision
No, the entity is not making a non-taxable importation under section 13-10 of the GST Act when it imports a drug for use in treating a patient. The entity is making a taxable importation under section 13-5 of the GST Act.

Facts
The entity is a medical practitioner. The entity imports a drug for use in treating a patient. The drugs are not non-taxable importations under Part 3-2 of the GST Act. The entity is registered for goods and services tax (GST). The goods are imported and are entered for home consumption within the meaning of the Customs Act 1901 .

Reasons for decision
Summary: Under section 13-10 of the GST Act, an importation is a non-taxable importation if: As the importation is not a non-taxable importation under Part 3-2 of the GST Act, it is necessary to determine if, had it been a supply, it would have been GST-free or input taxed. Under section 38-50 of the GST Act, a supply of certain drugs and medicinal preparations are GST-free. However, a supply of a drug or medicinal preparation is only GST-free under section 38-50 of the GST Act if: While the drugs imported by the entity, may be drugs which are for human use or consumption, it is necessary to determine whether the supply is to an individual for private or domestic use or consumption. The drugs are being imported by the entity to be used in the carrying on of its enterprise. The entity is not importing the drugs for its own private or domestic use. Therefore, if there had been a supply to the entity (instead of an importation by the entity), the supply would not be GST-free under section 38-50 of the GST Act. Furthermore, if there had been a supply to the entity, the supply would not be GST-free under any other provision in Division 38 of the GST Act nor would it be input taxed under Division 40 of the GST Act. Therefore, the importation is not a non-taxable importation under section 13-10 of the GST Act. As such, the entity is making a taxable importation under section 13-5 of the GST Act when it imports drug for use in treating a patient.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 13-5 section 13-10 Division 38 section 38-50 subsection 38-50(7) Division 40 Part 3-2
Subject references: Goods and services tax GST-free GST health Section 38-50 - drugs & medicinal preparations Non-taxable importations Taxable importations