GST and weight loss foods

Terms we use

When we say invalid we mean enfeebled or disabled by illness.

What are weight loss foods?

There are a variety of food products promoted and sold for use in weight reducing diets. These include formula foods and very low energy or very low calorie diet foods (VLED / VLCD). Some of these foods may carry a recommendation that they be taken under the supervision of a health care professional.

Weight loss foods may include:

• soup mixes
• beverage preparations, for example, drink mixes and 'shake' powders
• meal replacement bars, and
• dessert mixes.

What is the GST treatment of weight loss foods?

Weight loss foods are treated the same as similar non-weight loss foods. There is no exemption from GST for any food or beverage on the grounds that it is for weight reduction. There is also no exemption from GST for any food on the grounds that it is recommended or sold by a doctor, hospital or a pharmacy outlet.

For example:

Weight loss food	Similar non-weight loss food	GST treatment
Meal replacement bar	Health food bar, muesli bar, protein bar, energy bar	Subject to GST
VLCD / VLED soup mix	Soup mix	GST-free
Dessert mix	Dessert mix	GST-free
Frozen prepared diet meal	Frozen prepared meal	Subject to GST

Schedule 1 of the GST Act lists food that is subject to GST (that is, taxable food). If a food is not listed in Schedule 1, and it is for human consumption, it will be GST-free. For example, powdered soup mixes and dessert mixes.

Schedule 2 of the GST Act lists GST-free beverages. Beverages, and ingredients for beverages, are only GST-free if listed in Schedule 2. This includes products such as:

• milk
• water
• coffee powder, and
• fruit juice that is at least 90% juice.

Weight loss beverages and ingredients for weight loss beverages are not listed in Schedule 2 and, therefore, are subject to GST.

Beverages and ingredients for beverages of a kind marketed principally for invalids are GST-free under the GST Act. This applies only to beverages and not to other foods.

How a product is promoted or advertised and to what extent it is marketed for invalids will be a determining factor in it being GST-free or taxable. Beverage preparations principally marketed for those who are merely overweight or moderately obese do not meet the requirements to be GST-free.

For more information on taxable food and GST-free beverages, refer to GST and food - schedules 1 and 2 (NAT 3393).

Example 1

Leo sells 'Loseweight', which is marketed as a formulated low energy chocolate flavoured shake mix. The shake mix is added to water and stirred or blended before consumption.

The product is sold through pharmacy outlets and is sometimes recommended by doctors to persons needing to lose weight to reduce the risk of developing illness, or to help manage existing medical conditions. The pharmacies may provide information, advice or supervision to those purchasing the product.

'Loseweight' is marketed as a meal replacement suitable for overweight and obese persons wishing to reduce their Body Mass Index. It is not principally marketed as food for invalids.

The shake mix is an ingredient for a beverage that is not listed in Schedule 2 of the GST Act. Leo's shake mix is therefore subject to GST.

Example 2

Anne sells 'Slimbar', a meal replacement bar. Its ingredients include:

• milk powder
• glucose
• nuts
• rolled oats
• dried fruits
• vegetable oils
• various vitamins, and
• minerals etc.

'Slimbar' is sold through pharmacies and is sometimes recommended by doctors to patients needing to reduce weight.

'Slimbar' is a product similar to a health food bar or a muesli bar which are listed in Schedule 1 of the GST Act as food that is not GST-free.

'Slimbar' is therefore subject to GST.

Example 3

Marita produces a low calorie powdered formula which is added to water to make a beverage that is designed to form part of a treatment program for those disabled by illness, for example, the morbidly obese. It is mainly sold through hospitals to patients under medical supervision.

The product provides the essential nutrition to sustain people who are enfeebled or disabled by an illness, and is clearly labelled and promoted as such. It is supplied and marketed principally as a food for invalids.

The powdered formula is an ingredient for a beverage of a kind listed in Schedule 2 of the GST Act.

The sale of Marita's product will be GST-free.

More information

For more information about GST and food, refer to:

• GST food guide (NAT 3338)
• GST and food - schedules 1 and 2 (NAT 3393)

For a copy of our publications or for other information:

• visit our website at www.ato.gov.au
• phone 13 28 66, or
• write to us at

Australian Taxation Office
PO Box 3524
ALBURY  NSW  2640.

If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77.

If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.