The Australian Taxation Office (ATO) is considering plans to apply the Goods and Services Tax (GST) to toddler formula. This move is part of an effort to tighten GST regulations, but it could increase household costs. The change would apply the 10% tax to formula sold for children over 12 months and would reverse the current GST-free status of many toddler milk products. If implemented, the change would affect major brands in a market worth $500 million and may cause concern among young families and health professionals.
At the moment, infant formula for babies under 12 months remains exempt from GST, in line with current legislation. However, the lack of specific age guidelines in the law has created a grey area for products marketed for toddlers. Demand has increased, with a study from a major Australian university showing that one in three children have tried toddler formula. This has prompted the ATO to reassess the rules and consider whether such products should be taxed.
Representatives from companies producing formula are expected to meet with the ATO soon. It is still unclear if this will be part of a consultation or a formal policy announcement. Should the tax change go ahead, the price of toddler formula could increase by around $3 per can. While this might sound small, it can significantly affect families that buy frequently. With yearly sales sitting at $500 million, the GST on toddler formula could generate close to $50 million in additional revenue.
Beyond formula, the ATO has also extended its focus to other GST inconsistencies, including supermarket salad packs. Small changes in ingredients, such as adding olives, can result in a product moving from GST-free status to taxable. These detailed reviews may clarify parts of Australia's GST rules, but they also raise concerns about timing and practicality, especially as families continue to face rising living costs.
