EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health and Ageing
A New Tax System (Goods and Services Tax) Act 1999
The purpose of this Determination is to grant GST-free status to packets containing 25 or less tablets (small packets) of ibuprofen-based analgesics (by brand names such as Nurofen, Panafen and Herron Blue).
Section 177–10 (4) (b) of the A New Tax System (Goods and Services Tax) Act 1999
(the GST Act) provides that the Health Minister may make a determination in respect to
s.38–47 (1) of the GST Act. This section of the GST Act provides that a health good is
GST-free if it is a supply of goods of a kind that the Health Minister, by determination in writing, declares to be goods the supply of which is GST-free.
In June 2003, the National Drugs and Poisons Scheduling Committee (NDPSC) made a decision to exempt small packets of ibuprofen-based analgesics from the scheduling requirements of Schedule 2 of the Standard for the Uniform Scheduling of Drugs and Poisons (SUSDP). As a result of this decision, small packets of ibuprofen-based analgesics can now be sold in non-pharmacy settings. A side effect of this decision was that these small packets of ibuprofen-based analgesics lost their GST-free status.
A Determination made on 1 July 2000 granted GST-free status to small packets of single active ingredient aspirin and paracetamol-based analgesics. The Determination I am now tabling makes small packets of ibuprofen-based analgesics GST-free, to be consistent with the treatment of small packets of aspirin and paracetamol-based analgesics.
This Determination replaces an earlier Determination, GST-free Supply (Drugs and Medicinal Preparations) Determination 2004, which came into effect from 1 April 2004. Due to an administrative oversight, that Determination was not tabled in Parliament, and had lapsed after 15 June 2004. The Determination I am tabling today will therefore take effect retrospectively from 16 June 2004, to ensure the continuity of GST-free status for these products.
All the necessary legal requirements have been met, as required before exercising the power to make this determination. The Office of Regulation Review have advised that a Regulatory Impact Statement (RIS) is not required.
Overview
The A New Tax System (Goods and Services Tax) Act 1999, enacted by the Parliament of Australia, introduced a comprehensive tax reform framework, including the GST, to replace the previous federal wholesale tax system. In response to a specific gap in the legislation concerning the GST treatment of certain medications, the Minister for Health and Ageing issued the GST-free Supply (Drugs and Medicinal Preparations) Determination 2005 to address the GST-free status of small packets of ibuprofen-based analgesics. This determination was made to ensure consistency in the treatment of small packets of analgesics, aligning them with the GST-free status already granted to small packets of aspirin and paracetamol-based analgesics. The objective was to maintain the continuity of GST-free status for these essential health products, facilitating their availability in non-pharmacy settings without the imposition of GST.
Scope and Application
The A New Tax System (Goods and Services Tax) Act 1999 Determination provides for the grant of GST-free status to small packets of ibuprofen-based analgesics, aligning them with the treatment of small packets of aspirin and paracetamol-based analgesics. Specifically, packets containing 25 or fewer tablets of ibuprofen-based analgesics, such as those branded as Nurofen, Panafen, and Herron Blue, are exempt from GST. This decision follows the National Drugs and Poisons Scheduling Committee's (NDPSC) 2003 resolution to exempt these small packets from the scheduling requirements of Schedule 2 of the Standard for the Uniform Scheduling of Drugs and Poisons (SUSDP), allowing their sale in non-pharmacy settings. The Minister for Health and Ageing has exercised their power under Section 177–10 (4) (b) of the GST Act to make this determination, which applies retroactively to 16 June 2004 to ensure continuity in GST-free status. This Determination supersedes the earlier GST-free Supply (Drugs and Medicinal Preparations) Determination 2004, which was inadvertently not tabled in Parliament and subsequently lapsed.
Key Provisions
The main operative sections of the Determination (section 177–10 (4) (b) of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)) enable the Health Minister to make a written determination that certain goods are GST-free. Specifically, this Determination (s. 38–47 (1) of the GST Act) grants GST-free status to small packets containing 25 or fewer tablets of ibuprofen-based analgesics. This Determination aligns with a decision made by the National Drugs and Poisons Scheduling Committee (NDPSC) in June 2003, which removed the scheduling requirements for these small packets, allowing them to be sold in non-pharmacy settings. The Determination replaces a previous one that lapsed due to an administrative oversight and will take effect retrospectively from 16 June 2004 to maintain the GST-free status for these products.
This Act imposes several obligations on the parties involved. Manufacturers, suppliers, and retailers of ibuprofen-based analgesics must ensure that any small packets of 25 or fewer tablets comply with the GST-free status as per this Determination. They must also maintain records to demonstrate that these products are correctly labelled and sold as GST-free. Additionally, the Health Minister is required to make a written determination and ensure that all legal requirements are met before exercising this power. The Determination itself mandates that all relevant stakeholders adhere to the stipulations regarding the GST-free status of these small packets.
Breaches of this Determination could result in several consequences. While the Act does not specify detailed penalties for non-compliance with this Determination, it generally allows for enforcement actions under the GST Act, which can include fines and legal proceedings. Non-compliance may also lead to loss of the GST-free status, resulting in the need to charge GST on these products. This could potentially affect the pricing and availability of ibuprofen-based analgesics in the market. The specific penalties for non-compliance would be subject to the broader provisions of the GST Act and any relevant administrative or judicial decisions.