SME Tax Cut Benefit Wiped Out By Medical Device Tax
3rd May 18
Proposals from the Australian Government to impose new cost imposts on suppliers of low-risk medical devices will eliminate the entire benefit of its tax cuts for many small businesses in Australia’s dental industry.
Key Issues For The Dental Industry —
The Australian Dental Industry Association (ADIA) has been a strong supporter of the Australian Government’s commitment to reduce tax rates for small business. It is in this context that ADIA, and the broader dental industry, is disappointed that for many of small businesses in the dental industry, the benefit of the small business tax cuts will be entirely eliminated by a proposed new medical devices tax being proposed by the Australian Government and due to kick-in on 1 July 2018.
The concerns of the dental industry surround a proposal of the Therapeutic Goods Administration (TGA) to impose on businesses a new impost to place low-risk medical devices on the Australian Register of Therapeutic Goods (ARTG). The ARTG is the list of medicines and medical devices that can be lawfully supplied in Australia. For the first time businesses will have to pay $530 for each new ARTG low-risk medical device entry.
This may not seem like a large amount, but for many small businesses in Australia’s dental industry it’s huge cost. These businesses just want to do the right thing. They want to invest in their business. They want to pay their staff more – just like the Treasurer wants them to. However, the proposed medical devices tax just makes this harder.
The proposed new tax on low-risk medical devices will apply on products such as speciality surgical instruments. It is estimated that for small businesses the cost will be between $4,240 and $13,250 per year, a large sum for the 80% of businesses in Australia’s dental industry that turnover less than $10 million per year.
For many of these businesses the gains from the small business tax cut will be entirely wiped-out. That’s why ADIA is calling for the proposed introduction date of 1 July 2018 be delayed, allowing for the for the proposed medical devices tax to be subjected to formal review to assess its impact on small business,.
Acknowledging the technical debate as to whether the TGA’s proposal constitutes a fee or a tax, ADIA suggests that the proposal needs to be looked at in its entirety.
The increased funds that the TGA will be extracting from small businesses will be partially funding what any reasonable person would argue are the ordinary functions of government. These include public awareness campaigns, regulatory reform, departmental finance and audit activities plus enforcing sanctions and penalties. When business is being forced to pay for these functions, describing the revenues as a new tax is not without merit.
Member engagement —
ADIA provides leadership, strategy, advocacy and support. Our members set our agenda, fund our activities and directly benefit from the results. With respect to matters associated with medical device regulation, representatives of ADIA member businesses serving on the ADIA-PRPC Product Research Policy Committee provide advice and guidance to the national office team responsible for managing the research projects.
Currency & Disclaimer —
This update was issued on 3 May 2018 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations. The statements, regulatory and technical information contained herein are believed to be accurate and are provided for information purposes only. Readers are responsible for assessing its relevance and verifying the accuracy of the content. To the fullest extent permitted by law, ADIA will not be liable for any loss, damage, cost or expense incurred in relation to or arising as a result of relying on the information presented here.
This publication is available for your use under a Creative Commons Attribution 3.0 Australia licence, with the exception of the ADIA logo, other images and where otherwise stated.
28th Dec 17
ADIA has been invited to provide advice to the Senate’s select committee on red tape which is reviewing how the health sector is disadvantaged by regulations that are burdensome, complex, redundant or duplicated across jurisdictions.
5th Mar 18
The TGA is proposing to levy for the first time an application fee for placing Class 1 medical devices on the Australian Register of Therapeutic Goods (ARTG), a proposal that will significantly add business compliance costs.