How tampons became a political hot potato

November 2018

It's long been known that Australian women have been subject to the so-called "pink tax" but recent legislation intends to remove GST from tampons and other sanitary products.

It was an omission that made little sense to women, however, when the GST was introduced into Australia, it was not universally applied to all goods and services.

Australia's goods and services tax – or GST – is messy and the result of various deals done in Parliament to ensure it passed through the House. The carve-out was intended to ensure that low-income earners were not adversely affected by the application of GST on the basic necessities, however, those deals created some degree of unfair application.

For example, GST is applied to tampons but not to incontinence pads. Viagra is exempt from GST but nipple shields for breastfeeding mothers are not. Breakfast cereals are GST-free but breakfast bars and drinks are taxable.

The problem with the carve out is that the boundaries between different products and services are not clear-cut or intuitive, creating anomalies between the tax treatment of different items.

Feminine hygiene products are one of those anomalies. For example, feminine hygiene products are not considered a health product but pads for incontinence as they are required for a medical condition. Toilet paper and nappies, arguably also essentials of life, are also taxed.

As a political football, the GST didn't have to be quite so messy. Our Kiwi neighbours, however, took the simpler approach and apply GST to most things, leaving the social security system to target the needs of low-income earners.

Treasury has undertaken consultation to define what a feminine hygiene product is to remove it from the GST. The States and Territories have agreed to remove the tax. The Federal Government has stated that it intends to remove the tax on tampons from 1 January 2019 but as yet, no legislation has been introduced into Parliament to effect the change.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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