[Global IDT Insights] Australia Clarifies GST-Free Rules for Sunscreen Products

Editorial Team – [2025] 181 taxmann.com 275 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. Australia Issues Guidance on GST-Free Treatment of Sunscreen Products

Australia has issued Goods and Services Tax Determination (GSTD 2025/2) providing guidance on when a supply of a sunscreen product is GST-free. The Determination replaces earlier rulings listed in the Pharmaceutical Health Forum issues register and aligns with the Health Minister’s current GST-free Health Goods Determination. It sets out the criteria under the A New Tax System (Goods and Services Tax) Act 1999 for sunscreen products to be treated as GST-free.

The Determination focuses on sunscreen preparations for dermal application with a sun protection factor (SPF) of 15 or higher that are required, or in a class of goods required, to be included in the Australian Register of Therapeutic Goods (ARTG) under the Therapeutic Goods Act 1989 (TG Act). It also outlines a compliance approach to assist suppliers in determining ARTG requirements and provides clarity on when a product is considered to be marketed principally for use as sunscreen.

Key aspects of this determination include

(a) GST-free supply of sunscreen products – A supply of a product containing sunscreen is GST-free if it is of a kind that:

(i) is a sunscreen preparation for dermal application

(ii) has an SPF of 15 or more

(iii) is required to be included in the ARTG under the TG Act, and

(iv) is marketed principally for use as sunscreen.

Suppliers and recipients may mutually agree to treat a supply as taxable, in which case the GST-free treatment does not apply.

(b) Determining ‘of a kind’ – The term refers to whether a product belongs to the same genus, class, or category as GST-free sunscreen products. A product is ‘of a kind’ if it exhibits all the distinguishing features required – dermal sunscreen preparation, SPF 15 or more, ARTG inclusion, and primary marketing as sunscreen. The first three features are objective; the marketed-use assessment requires judgement.

(c) Sunscreen preparation for dermal application – This includes preparations containing sunscreen intended for application to the skin—including the lips—to reduce UV-related skin damage. Acceptable forms include creams, lotions, gels, balms, oils, mousses, and similar products, packaged in bottles, tubes, sprays, pumps, or sticks.

(d) SPF requirements – The product must have an SPF of 15 or higher, determined under the Australian/New Zealand Sunscreen Standard, and the SPF must be displayed on the packaging.

(e) Inclusion in the Australian Register of Therapeutic Goods – Therapeutic sunscreens are regulated for safety, quality, and efficacy. Unless excluded, they must be listed or registered in the ARTG. Listed products carry an ‘AUST L’ number and registered products carry an ‘AUST R’ number. Presence of these numbers is indicative that the product is required to be included in the ARTG. The Determination includes a compliance approach for suppliers to verify ARTG inclusion.

(f) Marketed principally for use as sunscreen – Marketing is assessed objectively based on how a reasonable observer views the product’s marketed purpose. A product is marketed principally as sunscreen when sun protection is its main or predominant marketed use, judged from all marketing elements including labelling, packaging, directions for use, placement, promotion, and advertising across the supply chain. Directions consistent with effective UV protection support a primary sunscreen purpose.

Sunscreen products may have additional functions (e.g., moisturising, anti-ageing, colour correction). Products with additional functions remain GST-free if sunscreen remains the dominant marketed use.

Labels and packaging provide a primary source of marketing information. Prominence, ordering, and sizing of content, including product name, indicate whether sunscreen use is primary. Multi-use descriptions (e.g., ‘2-in-1’) suggest equal uses and may indicate the product is not principally marketed as sunscreen, unless the sunscreen marketing is clearly predominant.

The determination also includes practical examples illustrating how products are assessed, including facial creams, tinted sunscreens, lip balms, dual-purpose products, and overall impression analysis. These examples demonstrate the application of the SPF, ARTG inclusion, and marketed principally tests.

Source – Official Document

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