GST-free Supply (Health Goods) Determination 2005

Overview

The GST-free Supply (Health Goods) Determination 2005, enacted in 2005, addresses the issue of maintaining GST-free status for nicotine sublingual tablets when they are exempted from the scheduling requirements of the Standard for the Uniform Scheduling of Drugs and Poisons. This determination was made under the authority of the Health Minister, in accordance with the provisions of the A New Tax System (Goods and Services Tax) Act 1999. The policy objective of this determination is to ensure that nicotine sublingual tablets remain GST-free, thereby facilitating access to these products for consumers without the added burden of GST. This measure aligns with broader public health initiatives aimed at improving health outcomes by supporting smoking cessation efforts.

Scope and Application

The GST-Free Supply (Health Goods) Determination 2005 applies to nicotine sublingual tablets, which are a form of nicotine replacement therapy, and provides that their supply remains GST-free under the A New Tax System (Goods and Services Tax) Act 1999. This determination ensures that when the National Drugs and Poisons Schedule Committee decision to exempt nicotine sublingual tablets from scheduling requirements under the Standard for the Uniform Scheduling of Drugs and Poisons takes effect on 1 January 2006, these products will not incur GST. The determination is effective from 31 December 2005 and applies to any entity or individual making a supply of these goods in Australia. The determination does not extend to other forms of nicotine replacement therapy or other goods unless specifically declared by the Health Minister. The decision not to conduct consultation was made on the basis that the instrument is minor and does not substantially change the law, and the Office of Regulation Review has confirmed that the determination will not impact business or restrict competition.

Key Provisions

The primary operative sections of this determination under the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) are sections 38-47(1) and 177-10(4)(b) (section 38-47(1) of the GST Act provides that a supply 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; section 177-10(4)(b) allows the Health Minister to make such a determination). This determination specifically aims to grant GST-free status to nicotine sublingual tablets, also known as nicotine replacement therapy (NRT), effective from 31 December 2005. This is to ensure that the GST-free status of these products is maintained despite the decision of the National Drugs and Poisons Schedule Committee (NDPSC) to exempt nicotine sublingual tablets from the scheduling requirements of Schedule 2 of the Standard for the Uniform Scheduling of Drugs and Poisons (SUSDP), effective from 1 January 2006. The Act imposes certain obligations on the parties and entities it governs. The Health Minister is required to make a written determination to declare that a supply of goods is GST-free, as per section 38-47(1) of the GST Act. The Minister has exercised this power by tabling the GST-free Supply (Health Goods) Determination 2005, which grants GST-free status to nicotine sublingual tablets. This determination is necessary to counteract the effect of the NDPSC decision, which would otherwise result in the loss of GST-free status for these products. Furthermore, the determination is made in the interests of better health outcomes and to maintain the status quo regarding the sale and availability of nicotine sublingual tablets. Breach of the provisions in the GST Act, including failure to comply with the GST-free determination, can lead to civil and criminal consequences. Civil penalties include the imposition of a pecuniary penalty for non-compliance, with the maximum penalty being the greater of $2,220 or three times the amount of GST involved in the contravention (section 186-1 of the GST Act). Criminal penalties are also applicable, including fines and imprisonment, depending on the severity and frequency of the offence (section 186-3 of the GST Act). However, the determination itself does not create additional offences but rather ensures that existing provisions continue to apply correctly to the specified goods.