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: • it makes an importation, that is covered by subsection 18(1) of the Therapeutic Goods Act 1989 , of drugs that are injections, containing material of human or animal origin, to treat its illness, and • the drugs are the subject of an approval under paragraph 19(1)(a) of the Therapeutic Goods Act?
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
Section 13-5 of the GST Act provides that an entity makes a taxable importation if: • goods are imported, and • the entity enters the good for home consumption (within the meaning of the Customs Act 1901 ).
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: • it is a non-taxable importation under Part 3-2 of the GST Act, or • it would have been a supply that was GST-free or input taxed if it had been a supply.
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: • the drug or medicinal preparation is for human use or consumption, and • the supply is to an individual for private or domestic use or consumption.
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. Note: where a medical practitioner, pharmacist etcetera, imports the drug to on-supply, subsection 38-50(7) of the GST Act will not be satisfied. The supply of the drug to a medical practitioner, pharmacist etcetera would not be a supply to an individual for their private or domestic use or consumption and would not be GST-free under section 38-50 of the GST Act. As such, the importation of the drug under these circumstances would be a taxable importation. However, the subsequent supply of the drug by the medical practitioner, pharmacist, etcetera to a patient may be GST-free.