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Shifting GST food boundary doesn't shift issue

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20 April 1999

Shifting boundary doesn’t shift issue The Democrats policy released today docs nothing to solve the problem of defining food for the GST, the Australian Society of Certified Practising Accountants (CPAs) said today.

“While the Democrats claim to have solved the problem o f defining food, in reality nothing could be further from the truth. It actually provides evidence for why food should be included,'’ Angela Ryan ASCPA Tax Director said today.

“International experience shows that there are no simple definitions that will solve the problem o f defining food. While the Democrats have made a valiant attempt, it is clear that making food GST free is no solution at all.

What is ‘food’ under the definition proposed by the Democrats? l"he following list of questions outline the complexity o f the issue:

■ Under the proposal Ifesh fruit will be GST free, but does that mean any packaged or tinned fruit will be taxed? Won’t that disadvantage some rural areas where supplies of fresh fruit are limited? Will Australia be like the UK and declare toffee apples to be fresh fruit as the product is mostly an apple?

■ If dairy products are GST free what about Soy milk and goals milk/cheese? Does that mean that people with special dairy free diets have to pay a higher tax rale? Is flavoured milk a dairy product?

■ Packaged food will be taxed as it is “effectively a takeaway” but what does packaged mean? Would frozen peas be taxed, or what about cheese slices, and what about a frozen pizza?

■ Cooking ingredients are to be GST free but bicarbonate of soda is also a cleaning agent. Does that mean the retailer has to ask you what you are going to use it for?

* Meat is to he GST free but prepared foods arc not. What does this mean for meat skewers prepared in a honey dressing bought from a butcher?

■ Confectionary will be taxed but does that follow the current wholesale sales tax definition that took two years to decide the lax status of frozen yoghurt? Arc biscuits confectionary? What about cakes?

“if we go the route of taking food out o f the GST, however we define it, the disputes will be in the courts before the ink has dried on the legislation. Whal we will end up with is a system that looks remarkably like the current wholesale sales tax system but with 1.6 million taxpayers struggling with the complexity rather than 80,0U0,” Ms Ryan said.

Contact: Angela Ryan, ASCPA Tax Director, 03 9859 9620,0414 865 339 (mob), or Lisa Armstrong, PR Manager - NSW, 02 9375 6205 (bh), 0414 834 700 (mob).

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Australian Society of Certified Practising Accountants 170 Queen Street, Melbourne, Victoria 3000 Tel.: U3 9600 9606 Fax: 03 9602 1163 ACN 008 392 452