Whilst most items attract GST, there are some goods and services that are considered GST-free.

Sales that do not include GST in their price are known as GST-free sales. In contrast, sales that have GST included in their price are known as ‘taxable sales’.

Examples of items that are GST-free include:

• basic food, such as fruits, vegetables, meat, fish and eggs
• medical and other health care services for which a Medicare benefit is payable
• some educational services provided by schools, universities and TAFE
• goods and services which are exported from Australia
• some government charges such as car registration and passport fees.

Working out whether an item attracts GST isn’t always simple.

Consider the following situation.

Let’s say you purchase a pre-made sandwich from a café.

While the bread and basic food ingredients (such as lettuce, tomato and cheese) may be GST-free, the sandwich ‘as a whole’ attracts GST because it is a ‘prepared food’.

When you buy the sandwich, you are paying for more than the individual ingredients. You’re also paying for the labour, packaging and the convenience of having the sandwich prepared and ready to eat.

GST applies to the final price of the sandwich, even though its ingredients are GST-free.

The ATO provides a Detailed food list and a GST food and beverage tool to assist with calculating GST status.

If you are unsure whether an item attracts GST or is GST-free, don’t guess or rely on hearsay from others. Check the ATO website, contact the ATO or speak to your registered tax adviser. They can provide accurate advice and support to help you get things right from the start.