EXPLANATORY STATEMENT
Issued by the Minister for Health
A New Tax System (Goods and Services Tax) Act 1999
GST-free Supply (Drugs and Medicinal Preparations) Determination 2015
The purpose of the GST-free Supply (Drugs and Medicinal Preparations) Determination 2015 (“this Determination”) is to renew the grant of GST-free status to packs containing 25 or less tablets (small packs) of analgesics containing aspirin, ibuprofen and paracetamol, effective from 1 October 2015. Small packs of analgesics can be sold outside pharmacy settings, such as supermarkets, as they are not restricted for supply under the Standard for the Uniform Scheduling of Medicines and Poisons, which is implemented under State and Territory legislation. Since the commencement of the GST-regime in 2000, these items have been made GST-free in the interest of consistency, as larger packs of analgesics sold in pharmacies (whether or not through the Pharmaceutical Benefits Scheme (PBS)) have been GST-free.
Subsection 38-50(5) of the A New Tax System (Goods and Services Tax) Act 1999 provides that packs of analgesics which are GST‑free when sold in larger quantities can also be GST-free if the Health Minister makes a Determination, see paragraph 38-50(5)(b), along with subsection 177-10(4).
Small packs of analgesics containing aspirin and paracetamol were granted GST-free status by the GST-free Supply (Drugs and Medicinal Preparations) Determination 2000 (No. 2). That Instrument was succeeded by the GST-free Supply (Drugs and Medicinal Preparations) Determination 2004 (No. 2), which extended GST-free status to small packs of analgesics containing ibuprofen. The 2004 Instrument is set to sunset on 1 October 2015. This Determination is substantially the same as the 2004 Instrument.
The Office of Best Practice Regulation has advised that a Regulatory Impact Statement is not required.
Consultation
The 2000 and 2004 Instruments referred to above were endorsed by the Federal Treasurer and all the State and Territory Treasurers in accordance with clause 34 of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA). Further consultation with State and Territory Treasurers on this Determination was unnecessary and not undertaken as the Determination does not substantially alter existing arrangements and will continue to give effect to the agreement made under the IGA with respect to small packs of analgesics.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
GST –free Supply (Drugs and Medicinal preparations) Determination 2015
The GST-free Supply (Drugs and Medicinal Preparations) Determination 2015 (“this Determination”) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Determination
The purpose of this Determination is to renew the GST-free status of small packs of analgesics containing aspirin, ibuprofen and paracetamol.
A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) provides that drugs and medicines are GST-free if they are supplied under the Pharmaceutical Benefits Scheme (PBS). The GST Act also provides, in effect, that drugs and medicines supplied outside the PBS will also be GST-free if they come within the scope of Schedules 2, 3, 4 and 8 in both Standard for the Uniform Scheduling of Medicines and Poisons and the current Poisons Standard.
Small packs of analgesics containing aspirin and paracetamol were made GST-free by the GST-free Supply (Drugs and Medicinal Preparations) Determination 2000 (No. 2). That Instrument was succeeded by the GST-free Supply (Drugs and Medicinal Preparations) Determination 2004 (No. 2), which extended the GST-free status to small packs of analgesics containing ibuprofen. The 2004 Instrument is set to expire on 1 October 2015.
Human rights implications
This Determination engaged Articles 2 and 12 of the International Covenant on Economic, Social and Cultural Rights by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
Conclusion
This Determination is compatible with human rights because it advances the protection of human rights.
Minister for Health
Overview
The GST-free Supply (Drugs and Medicinal Preparations) Determination 2015 was enacted to continue the exemption of small packs of analgesics containing aspirin, ibuprofen, and paracetamol from the Goods and Services Tax (GST), effective from 1 October 2015. This determination arises under the A New Tax System (Goods and Services Tax) Act 1999 and was introduced by the Minister for Health to maintain consistency with the GST-free status of larger packs of these analgesics, which are supplied under the Pharmaceutical Benefits Scheme or sold in pharmacies. The decision to grant GST-free status to these small packs aligns with the broader objective of ensuring equitable access to essential medications and was made in accordance with the intergovernmental agreements on financial relations. This renewal determination follows the expiry of the GST-free Supply (Drugs and Medicinal Preparations) Determination 2004, which previously provided the same exemption.
Scope and Application
The GST-free Supply (Drugs and Medicinal Preparations) Determination 2015 applies to small packs of analgesics containing aspirin, ibuprofen, and paracetamol, specifically those containing 25 or fewer tablets, aligning with the broader aim of the A New Tax System (Goods and Services Tax) Act 1999 to provide GST-free status to certain drugs and medicines. This Determination ensures that such small packs remain exempt from GST, a status they have enjoyed since the GST regime commenced in 2000. The continued GST-free status is intended to maintain consistency with larger packs of analgesics sold in pharmacies, which have always been GST-free, whether or not through the Pharmaceutical Benefits Scheme (PBS). This legislative determination affects the pharmaceutical industry, particularly suppliers of over-the-counter analgesics, and consumers purchasing these items, by ensuring they remain affordable. The jurisdictional reach of this Determination is national, applying uniformly across Australia, reflecting an agreement endorsed by the Federal Treasurer and all State and Territory Treasurers in line with the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. The Determination does not extend or restrict application through subordinate instruments but renews the existing GST-free status set out in previous Determinations.
Key Provisions
The GST-free Supply (Drugs and Medicinal Preparations) Determination 2015 (the Determination) renews the grant of GST-free status to small packs of analgesics containing aspirin, ibuprofen, and paracetamol, effective from 1 October 2015 (section 1). This means that these specific packs of analgesics will not be subject to the Goods and Services Tax (GST) when sold. The Determination applies to packs containing 25 or fewer tablets, which can be sold outside pharmacy settings, such as supermarkets, as they are not restricted for supply under the Standard for the Uniform Scheduling of Medicines and Poisons, which is implemented under State and Territory legislation. The GST-free status for these items has been maintained since the introduction of the GST regime in 2000, to ensure consistency with larger packs of analgesics sold in pharmacies, whether or not through the Pharmaceutical Benefits Scheme (PBS).
The Determination imposes obligations on the parties involved, particularly those who supply these small packs of analgesics. These suppliers must ensure that their products meet the criteria outlined in the Determination to qualify for GST-free status. This includes verifying that the packs contain 25 or fewer tablets of the specified analgesics and that they are sold in settings that are not restricted by State and Territory legislation. Additionally, the Determination aligns with the existing provisions in the A New Tax System (Goods and Services Tax) Act 1999, particularly subsection 38-50(5) and subsection 177-10(4), which allow for the Health Minister to make such determinations.
There are no explicit offences, penalties, or civil/criminal consequences detailed in the Determination itself for breaches of the GST-free status requirements. However, any non-compliance with the GST Act or related provisions could result in penalties under the Act, including fines and other sanctions. The GST Act provides for significant penalties for non-compliance, with maximum fines varying depending on the nature and extent of the breach. It is essential for suppliers to adhere to the Determination and the broader legislative framework to avoid potential penalties and legal consequences.