Ruqayyah Snyder
In Australia, there are products and services that are exempt from goods and services tax (GST). These include some food items, beverages, medical aids, appliances, and health items. Basic food, such as fruits, vegetables, meat, fish, and eggs, are GST-free, while prepared foods, like sandwiches, are subject to GST. Additionally, certain car purchases and leases may be GST-free under specific conditions. The Australian Taxation Office (ATO) provides resources and guidance to determine if a product or service is GST-free, and it is recommended to consult them or a tax advisor for clarification.
| Characteristics | Values |
|---|---|
| Basic food | Fruits, vegetables, meat, fish, eggs, bread, bread rolls, cooking ingredients (e.g. flour, sugar, pre-mixes) |
| Medical and healthcare services | Medicare-covered services, some medical aids and appliances |
| Education | Some services provided by schools, universities, and TAFE |
| Exports from Australia | Goods and services |
| Government charges | Car registration, passport fees |
| Services for recipients outside Australia | GST-free |
| Cars | Partial novation lease arrangements, eligible disability and employment purposes, lease duration and distance |
| Beverages | Tea, coffee |
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What You'll Learn
Basic food items, such as fruits, vegetables, meat, fish and eggs
In Australia, basic food items such as fruits, vegetables, meat, fish, and eggs are generally GST-free. This includes all fruits and vegetables, whether fresh, frozen, dried, canned, or packaged. For example, lettuce, tomatoes, and carrots would all be GST-free. Similarly, all meats for human consumption are GST-free, except when they are part of a prepared meal or savoury snack. So, while you can buy beef GST-free, a beef pie or beef jerky would be subject to GST.
Fish is also GST-free, and this includes seafood such as prawns, crabs, and lobsters. Eggs are also GST-free in Australia. It is worth noting that while these basic food groups are GST-free, if they are part of a prepared meal, they may be subject to GST. For example, a salad with vegetables and eggs that is sold in a restaurant would be subject to GST.
Additionally, cooking ingredients like flour, sugar, pre-mixes, cake mixes, fats, and cooking oils are also GST-free. This means that you can buy the ingredients to make a cake GST-free, but if you buy a cake that is already made, you will pay GST on the final product.
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Medical aids, appliances and health services
In Australia, GST-free sales refer to sales that do not include GST in their price. There are specific rules that determine if a supply is GST-free. For instance, a supply of service is usually GST-free if the recipient is outside Australia.
Medical aids, appliances, and health services are GST-free if they satisfy certain conditions. These conditions include being listed in Schedule 3 of the GST Act or GST regulations. This means that only the Australian Government can decide whether a medical aid or appliance is GST-free. If a medical aid or appliance is GST-free, it remains so at every point in the supply chain, including when hired out. For example, a wheelchair rented from a chemist does not include GST in the rental fee. Spare parts specifically designed for a GST-free medical aid or appliance are also GST-free, but generic parts are taxable.
Adjustable beds, mattresses, or overlays are GST-free if they are specifically designed for people with an illness or disability, not widely used by those without an illness or disability, and are listed in Schedule 3 of the GST Act or GST regulations.
GST-free medical aids and appliances can be treated as taxable if the purchaser and supplier agree. This may occur when a manufacturer supplies a range of GST-free and taxable items to a retailer, and they do not want to identify the GST status of each product. In such cases, the purchaser may be eligible to claim a GST credit for the GST paid but can still sell these items GST-free to customers.
GST-free treatment is also extended to health services, including medical services that attract a Medicare benefit or are commonly used health services listed by the Government. This includes healthcare provided at hospitals, nursing homes, and similar establishments, along with accommodation, drugs, dressings, and meals supplied to patients or residents as part of their treatment or care. Community care services for the elderly and people with disabilities are also GST-free.
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Educational services
In Australia, educational services are generally GST-free. This includes pre-school, primary, and secondary education courses, as well as tuition, facilities, curriculum-related activities, and instruction. However, it is important to note that GST exemptions apply specifically to "education courses." This term is defined by the Australian Taxation Office (ATO) and includes tuition, facilities, and other curriculum-related activities and instruction.
For example, if a school engages a private tutor to assist a student with learning difficulties, the school is entitled to an input tax credit for the GST-inclusive fee charged by the tutor. Additionally, GST is not payable on deposits held as security unless the amount is forfeited or applied towards a taxable supply.
English as a Second Language (ESL) courses, Adult and Community Education (ACE) courses, and bridging, preparatory, or remedial literacy and numeracy courses are also GST-free if they are accredited by the relevant state or territory accreditation authority and are not classified as 'hobby' courses. Recognised ACE course providers are exempt from GST on their course sales to students, but their representatives or agents who deliver the courses are subject to GST on their services.
The GST-free status of educational services in Australia also extends to excursions or field trips that are directly related to the curriculum and are not predominantly recreational. However, if an organisation outside of the school, such as a drug education service, charges students directly for attending a seminar, the fee is GST-inclusive.
While most educational services are GST-free, commercial transactions conducted by educational institutions may still be subject to GST. Additionally, the supply of administrative services directly related to the supply of an education course is GST-free, but general service fees and compulsory administrative charges may be subject to GST.
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Exports from Australia
Goods and services exported from Australia are GST-free. This includes basic foods such as fruits, vegetables, meat, fish, and eggs, as well as some medical and healthcare services for which a Medicare benefit is payable.
The Australian Taxation Office (ATO) provides guidelines on GST-free exports. For example, a supply of service is typically GST-free if the recipient is outside Australia, and there are specific rules to determine if this is the case.
In the case of car exports, GST-free eligibility depends on the type of arrangement. Under a partial novation lease, where an individual leases a car directly, the car is GST-free. However, under a full novation arrangement where an employer leases the car, it is not GST-free.
Australia has a diverse range of exporting industries. Some of the notable ones include:
- Mining: Australia is a major copper mining country, and copper mining revenue is expected to increase due to higher prices and stronger demand from China, Japan, and other countries.
- Meat Processing: While the industry faced challenges due to the COVID-19 pandemic and fluctuations in export demand, it has seen a resurgence in export revenue and strong demand from markets like South Korea.
- Grain Growing: Australia's grain-growing industry is export-oriented, producing wheat, barley, canola, and other grains and oilseeds. Revenue has been volatile due to weather conditions, global prices, and crop supplies.
- Liquefied Natural Gas (LNG): LNG exports have experienced rapid growth, increasing from 20.0 million tonnes in 2010-11 to 80.9 million tonnes in 2022-23. Revenue is expected to continue rising, with ten LNG facilities now operational.
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Cars and car parts
In Australia, certain individuals are exempt from paying GST on cars and car parts. This exemption is intended to assist eligible veterans with their personal transportation. Eligible persons are those who have served in the Australian Defence Force or in any other armed force of Her Majesty and, as a result of that service, receive a disability compensation payment at a special rate.
To purchase a GST-exempt car or car parts, the eligible veteran should complete a 'Declaration for an exemption of GST on a car or car parts – disabled veterans' and present it to the motor trader at the time of purchase. The form is retained by the motor dealer, and the veteran does not pay the GST to them. Veterans who are eligible for a car GST exemption may also be eligible for registration concessions and should check this with their relevant state government.
If you are eligible to purchase a car GST-free, you are also entitled to purchase certain car parts GST-free, including items such as CD players. Parts that are not specifically for cars are not GST-free. For example, parts specifically for trucks, vans, buses, motorcycles, and other machinery are not GST-free. Car parts purchased by a business for sale to eligible people are not GST-free for the business.
If you are eligible to purchase a car GST-free, then you can also lease a car GST-free, provided that the lease is for a minimum of two years or you use the car to travel 40,000 kilometres from the date you lease it. You must also intend to use the car for the prescribed purpose for the whole of that period. Under a novation arrangement, whether a car is GST-free depends on the type of arrangement entered. If you lease it under a partial novation arrangement, the car is GST-free. Under a partial novation lease, your employer does not lease the car, but you lease it directly. If it is subject to a full novation arrangement, the car is not GST-free.
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Frequently asked questions
GST stands for Goods and Services Tax.
Some GST-free items in Australia include basic food (such as fruits, vegetables, meat, fish, eggs, and bread), medical aids and appliances, and health items such as medical and other healthcare services for which a Medicare benefit is payable.
If you are unsure whether an item is GST-free, you should check the Australian Taxation Office (ATO) website, contact the ATO, or speak to your registered tax advisor.
Yes, some services that are GST-free include certain educational services provided by schools, universities, and TAFE, as well as exported goods and services. Additionally, a supply of service is typically GST-free if the recipient is outside Australia.
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