THE Australian Taxation Office (ATO) has provided updated guidance on how GST applies to burn products that are made of hydro gel and hydro colloids.

Burns products made from alginate, hydro colloids, hydro gels, polyurethane film and polyurethane foam are GST-free if they are specifically designed for people with an illness or disability.

If they are widely used by people without an illness or disability, they are not GST-free.

Most burn products that are gels, sprays or creams are designed for, or widely used by people with burns that are considered minor or trivial (including superficial burns, sunburn and scalds), and are not GST-free, as they are not specifically designed for people with an illness or disability.

The ATO acknowledged that its previous advice “may have given the impression that burn gels, sprays or creams made from hydro colloids or hydro gel are GST-free”.

As such, a transitional compliance approach is now in effect, and the organisation will not take compliance action regarding GST treatment of these products for tax periods ending on or before 31 Dec 2025, provided suppliers acted in good faith and do not seek to now take advantage of the transitional compliance approach.

The ATO advises that if a business supplies any of these products, owners need to check they are applying GST correctly – learn more HERE.

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