Private ruling: GST - drugs and medicinal preparations
Date of advice: 20 February 2026
Published: 7 April 2026
Ruling period: XX XXX 20XX to XX XXX 20XX
Date scheme commenced: XX XXX 20XX

Ruling: Q1: Is the supply by you of Products on prescription to patients a GST- free supply under section 38-50 of the A New Tax System (Goods and Services Tax) Act 1999? | A1: Yes

Relevant facts and circumstances: You are a pharmacy/dispensary. You are registered for GST. You purchase Product from Manufacturers. You pay GST on these purchases. XX% of the Product you supply is listed in Schedule 8 of the Standard of the Uniform Scheduling of Medicines and Poisons (SUSMP). The remainder of the Product is listed in Schedule 4 of the SUSMP. You only supply Product to private patients that have a prescription. You do not supply Product to hospitals, clinics or third-party suppliers.

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 38-50(1) | A New Tax System (Goods and Services Tax Act) 1999 subsection 38-50(7)

Reasons for decision: Summary: Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you must pay GST on any taxable supply that you make. Section 9-5 of the GST Act states: 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. (*denotes a term defined in section 195-1 of the GST Act) You make supplies of Product for consideration, in the course or furtherance of your enterprise in Australia, and you are registered for GST. Consequently, your supplies will be taxable supplies unless they are GST-free or input taxed. There are no provisions under which the supply would be input taxed. | Detailed Reasoning - GST-free supply: Section 38-50 of the GST Act outlines the circumstances in which the supply of a drug or medicinal preparation is GST-free. A supply of a drug or medicinal preparation will be GST-free where it first satisfies the requirements in subsection 38-50(7) of the GST Act, and also satisfies the requirements contained in at least one of subsections 38-50(1), 38-50(2), 38-50(4), 38-50(4A), 38-50(5) or 38-50(6) of the GST Act. Subsection 38-50(7) of the GST Act states: A supply of a drug or medicinal preparation covered by this section is GST-free if, and only if: (a) the drug or medicinal preparation is for human use or consumption; and (b) the supply is to an individual for private or domestic use or consumption. As you are selling the Product to individuals for private and domestic use and it is for human use, the requirements of subsection 38-50(7) of the GST Act are satisfied. As your sale of Product satisfies subsection 38-50(7) of the GST Act it is now necessary to determine whether your supply satisfies the requirements of at least one of the other subsections in section 38-50 of the GST Act in order to be GST-free. Subsection 38-50(1) of the GST Act states: 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 38-50(1)(a) of the GST Act covers drugs and medicines specified in Schedules 4 and 8 of the Standard of the Uniform Scheduling of Medicines and Poisons (SUSMP) that are only available on prescription. Many of these products were formerly labelled 'S4' and 'S8' medications. As at the 1 July 2000 it is compulsory to label these products as 'Prescription Medicine' and 'Controlled Drugs', respectively. Paragraph 38-50(1)(b) of the GST Act 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 1953 . Your supply of Product is only available on prescription and is the supply of a drug or medicine that is specified in either Schedule 4 or Schedule 8 of the SUSMP and therefore paragraph 38-50(1)(a) of the GST Act is satisfied. As your supply of Product on prescription to patients satisfies subsections 38-50(7) and 38-50(1) of the GST Act you are making a GST-free supply under section 38-50 of the GST Act.