Zero-Rated Goods in Australia: 2025 Guide to GST-Free Items

Zero-rated goods may not make headlines, but they play a significant role in shaping the everyday costs for Australians. As the government continues to tweak the GST landscape in 2025, understanding which items are GST-free can help you make smarter financial choices—whether you’re a shopper, business owner, or just keen to stretch your dollar further.

What Are Zero-Rated Goods?

Zero-rated goods, often called GST-free items in Australia, are products and services that are subject to a 0% Goods and Services Tax (GST) rate. This means businesses can claim GST credits on inputs, but consumers pay no GST at the register. The main aim? To keep essential goods and services affordable, particularly for lower-income Australians.

• Everyday food staples (like bread, milk, fresh fruit, and vegetables)
• Medical and health services
• Educational services
• Exports
• Some childcare and aged care services

For example, a loaf of bread at your local supermarket is zero-rated, but a chocolate bar is not. Similarly, a GP consultation is GST-free, but cosmetic surgery is not unless medically necessary.

2025 Policy Updates: What’s New?

In 2025, the Australian government reaffirmed its commitment to keep basic food, health, and education items zero-rated, resisting calls to broaden the GST base amid cost-of-living pressures. However, there were some tweaks worth noting:

• Plant-based alternatives: Following public consultation, the ATO clarified that plant-based milks (like almond or oat milk) and meat alternatives remain zero-rated if they meet specific nutritional and labeling standards.
• Telehealth services: In response to the surge in digital healthcare, most telehealth GP consultations are now explicitly GST-free, provided they mirror traditional in-person care.
• Export rules tightened: The ATO updated compliance measures to ensure businesses claiming zero-rated status on exports have robust documentation, targeting fraud and misclassification.

For businesses, the main benefit of selling zero-rated goods is the ability to claim back GST on inputs, improving cash flow. For consumers, zero-rated status keeps costs down on essentials—an especially welcome relief as inflation remains stubbornly high in early 2025.

Why Zero-Rated Goods Matter for Your Finances

Understanding zero-rated goods isn’t just for accountants. The policy has everyday impacts, including:

• Household budgeting: Knowing which items are GST-free can help you plan grocery shops and keep costs in check.
• Business pricing: If you run a business, correctly classifying goods as zero-rated can reduce compliance risks and improve profitability.
• Cost-of-living support: With food and health costs rising, the GST-free status of staples acts as a de facto subsidy for all Australians, particularly low-income families.

Take the example of a family of four: if GST was applied to all groceries, their annual bill could rise by over $1,000. For a small business exporting goods, zero-rating can mean the difference between staying competitive globally and being priced out of the market.

Common Misconceptions and Real-World Examples

Despite clear guidelines, confusion persists about what’s zero-rated. Here are a few real-world clarifications as of 2025:

• Fresh vs. processed: Fresh fruit is GST-free; canned fruit with added sugar is not.
• Meal kits: DIY meal kits with unprocessed ingredients are GST-free; ready-to-eat meals are not.
• Health foods: Protein powders and supplements are generally taxable unless prescribed by a doctor.

For the latest, always check the ATO’s 2025 updated GST food classification tool.

The Future of Zero-Rated Goods in Australia

While some economists argue for a broader GST base to boost revenue, political appetite for expanding GST to essentials remains low in 2025. With the cost-of-living crisis top of mind, the status quo is likely to hold for the foreseeable future. However, expect ongoing tweaks and clarifications as new products hit the market and digital services evolve.