ATO ID 2005/333: GST and personal importation of a drug that is the subject of an approval under the Therapeutic Goods Act 1989
Date of decision: 16 November 2004
Business line: Indirect Tax

Issue
Is the entity, a patient suffering from a serious illness, making a taxable importation under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when:

Decision
No, the entity is not making a taxable importation under section 13-5 of the GST Act. The entity's importation is a non-taxable importation.

Facts
The entity is a patient who is suffering from a serious illness. The entity is importing a drug that is an injection that contains material of human or animal origin. The drug has not yet been approved for supply in Australia. The drug is for the entity's personal use. In accordance with paragraph 19(1)(a) of the Therapeutic Goods Act, the entity's medical practitioner applied for, and was granted, an approval from the Therapeutic Goods Administration (TGA) to import the unapproved drug under the Special Access Scheme for the treatment of the entity. However, the entity, not the medical practitioner, imported the drug into Australia. The entity's importation of the drug is covered by subsection 18(1) of the Therapeutic Goods Act and Item 1(b) in Schedule 5 to the Therapeutic Goods Regulations 1990. The entity provided a copy of the medical practitioner's approval at the time of importation. The entity's importation is not covered by Part 3-2 of the GST Act.

Reasons for decision
Summary: Section 13-5 of the GST Act provides that an entity makes a taxable importation if: However, the importation is not a taxable importation to the extent that it is a non-taxable importation. Under section 13-10 of the GST Act, an importation is a non-taxable importation if: The entity's importation is not covered by Part 3-2 of the GST Act and therefore, the importation is only GST-free if, had the importation been a supply, it would have been GST-free or input taxed. Section 38-50 of the GST Act outlines the circumstances in which the supply of a drug or medicinal preparation is GST-free. Paragraph 38-50(6)(a) of the GST Act provides that a supply of a drug or medicinal preparation is GST-free if the drug or medicinal preparation is the subject of an approval under paragraph 19(1)(a) of the Therapeutic Goods Act and any conditions to which the approval is subject have been complied with. The entity's medical practitioner obtained approval under paragraph 19(1)(a) of the Therapeutic Goods Act to import the drug for the treatment of the entity. However, the entity's medical practitioner did not import the goods into Australia under this approval. The entity imported the goods into Australia and its importation is covered by subsection 18(1) of the Therapeutic Goods Act and Item 1(b) in Schedule 5 to the Therapeutic Goods Regulations. Therefore, it is necessary to determine if, for the purposes of paragraph 38-50(6)(a) of the GST Act, the drug is considered to be the subject of an approval under paragraph 19(1)(a) of the Therapeutic Goods Act when it is not imported under that approval. The effect of subsection 18(1) of the Therapeutic Goods Act and Item 1(b) in Schedule 5 to the Therapeutic Goods Regulations is that a person can import, for the purposes of treating themselves or their immediate family, injections that contain material of human or animal origin if the drugs are the subject of an approval under section 19 of the Therapeutic Goods Act. Therefore, the drugs retain their character as drugs that are "the subject of an approval under section 19 of the Therapeutic Goods Act" as they are for the treatment of that entity identified in the approval even though they are not imported by the medical practitioner who obtained that approval. As such, paragraph 38-50(6)(a) of the GST Act is satisfied. However, subsection 38-50(7) of the GST Act provides that a supply of a drug or medicinal preparation covered by section 38-50 is only GST-free if, and only if: As the entity is an individual and the drugs are for their own treatment, the requirements of subsection 38-50(7) of the GST Act are satisfied. As paragraph 38-50(6)(a) and subsection 38-50(7) of the GST Act are satisfied, if the importation of the drug had of been a supply, it would be GST-free under section 38-50 of the GST Act. As such, the entity's importation is a non-taxable importation under section 13-10 of the GST Act.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 13-5 section 13-10 section 38-50 paragraph 38-50(6)(a) subsection 38-50(7) Part 3-2
Subject references: Goods and services tax GST free GST health Section 38-50 - drugs & medicinal preparations GST imports Non-taxable importations