We do not pay GST on most food, vegetables and drinks for human consumption. GST at the rate of 10% is payable on prepared food as well as food consumed at restaurants or selling outlets. Alcoholic beverages such as wine, beer and spirits are taxable and hence, GST is payable on them. The relevant legislation on this matter is the A New Tax System (Goods and Services Tax) Act 1999.
The following foods are GST-free:
Bread and bread rolls without a sweet coating (such as icing) or filling; all meats for human consumption (except prepared meals or savory snacks); fruit, vegetables, fish and soup (fresh, frozen, dried, canned or packaged); fruit or vegetable juice (of at least 90% by volume of juice of fruit or vegetables); tea and coffee (unless ready-to-drink); cooking ingredients, such as flour, sugar, pre-mixes and cake mixes; fats and oils for cooking; un-flavoured milk, cream, cheese and eggs; spices, sauces and condiments; bottled drinking water; baby food and infant formula; spreads for bread (such as honey, jam and peanut butter) and breakfast cereals.
GST is payable on the following foods:
Bakery products, such as cakes, pastries, pies, sausage rolls (but not including bread and bread rolls); biscuits, crisp breads, crackers, cookies, pretzels, cones and wafers; savory snacks, confectionery, ice-cream and similar products; carbonated and flavored beverages (including flavored milk, flavored water and sports drinks) unless at least 90% by volume fruit or vegetable juice; all food and beverages sold in restaurants or for consumption on the premises on which they are supplied; hot food (takeaway); food marketed as prepared meals and some prepared food, including platters; any food not for human consumption and pet food or any food labeled or specified for animals.
There is a current debate on changes in the rate and tax base of GST. The Australian base is narrower and the rate is lowest compared to the average Value Added Tax (VAT) rate of 18% applied in the Organization for Economic Co-operation and Development (OECD) countries. Australian GST rate of 10% is applied to approximately 70% of the tax base. The debate is to either increase the rate or broaden the tax base. Food will be a prime candidate for broadening the base for GST.
Any change to GST including food items will require an amendment to the GST law. All States and Territories must unanimously support the change for it to take effect.