Issue
Is the entity, a supplier of lip balms, making a GST-free supply under subsection 38-47(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells SPF 30+ lip balms that were previously sales tax exempt?
Decision
Yes, the entity is making a GST-free supply under subsection 38-47(1) of the GST Act when it sells SPF 30+ lip balms that were previously sales tax exempt.
Facts
The entity supplies SPF 30+ lip balms that are both flavoured and unflavoured. The lip balms (all flavours) have an Australian Register of Therapeutic Goods number. The lip balms were sales tax exempt before 1 July 2000. The entity is registered for goods and services tax (GST).
There is no agreement between the entity and the recipient that the supply will not be treated as a GST-free supply under subsection 38-47(2) of the GST Act.
Reasons For Decision
Under subsection 38-47(1) of the GST Act a supply of goods is GST-free if determined as such, in writing, by the Health Minister. For the purposes of subsection 38-47(1) of the GST Act the Health Minister has made GST-free Supply (Health Goods) Determination 2005 .
Under this Determination, sunscreen preparations for dermal application that: • are marketed principally for use as sunscreen; and • have a sun protection factor rating of 15 or more; and • under the Therapeutic Goods Act 1989 are included in the Australian Register of Therapeutic Goods, or are goods in a class of goods required to be included in the Australian Register of Therapeutic Goods
are GST-free.
The lip balms have a sun protection factor rating of 30+ and have an Australian Register of Therapeutic Goods number. The issue in this case is therefore whether the lip balms are 'marketed principally for use as sunscreen'.
It is considered that the same interpretation is to be given to the meaning of the phrase 'marketed principally for use as sunscreen' used in subsection 38-47(1) of the GST Act as was given to the phrase 'marketed principally for use as a sunscreen preparation' used in Sales Tax (Exemption and Classification) Act 1992 (Sales Tax Act).
Therefore, sunscreen preparations which satisfy the 'marketed principally for use as a sunscreen preparation' test under the Sales Tax Act will also satisfy the 'marketed principally for use as sunscreen' test used in GST-free Supply (Health Goods) Determination 2005 .
The lip balms in question were previously sales tax exempt and therefore satisfied the 'marketed principally for use as a sunscreen preparation' test under the Sales Tax Act. Accordingly they will satisfy the 'marketed principally for use as sunscreen' test used in GST-free Supply (Health Goods) Determination 2005 . As the lip balms also satisfy the other remaining requirements of subsection 38-47(1) of the GST Act, their supply is GST-free. [HISTORY : This ATO ID was amended on 6 June 2007. The amendment was made to update the reference to the current GST-free Supply (Health Goods) Determination. This amendment does not change the decision applied under the previous Determination. Also, the finding that the SPF 30+ lip balms were previously sales tax exempt which meets the 'marketed principally for use as a sunscreen preparation' test for the purposes of the Determination, requires an analysis of the facts and circumstances of each case.]