The price of some sunscreens is set to rise as the Tax Office warns skincare companies it needs to slap GST on products not primarily promoted as sunblock.
A surge of luxury sunscreens and “multi-use” cosmetic creams that combine sun protection with anti-ageing and foundation elements – some costing hundreds of dollars for a 100ml tube – has led to confusion over which products are subject to the GST.
Claire Hamilton and daughters Chloe, 9, and Grace, 7. Claire had a melanoma removed and is always sun smart. Credit: Penny Stephens
The Australian Taxation Office said sunscreen products must be marketed principally as sun protection to remain GST-free. They must also be applied to the skin, be included on the Australian Register of Therapeutic Goods and have a sun protection factor of at least 15.
“Increasingly, modern products are being developed and marketed as having other benefits or uses, such as moisturising and tint,” a spokesperson said.
“If a product is not marketed principally for use as a sunscreen, it is, and always has been, subject to GST.”
Skincare companies say the ATO crackdown will increase the cost of their products. They fear it could discourage people from using sun protection.
But the Cancer Council says cosmetic products such as make-up or skincare products – even those with SPF – generally offer little to no defence. It recommends people wear an SPF50 or SPF50+ sunscreen under their make-up.
The ATO is encouraging skincare suppliers to review its updated guidance to ensure their products are priced correctly.
In its draft determination, the Tax Office said products labelled as sunscreen, sun protection, broad-spectrum protection, UVA and UVB protection, water and sweat resistant, and “reef friendly” were consistent with marketing for use as sunscreen.
Australia has the highest rates of skin cancer in the world.Credit: Luis Enrique Ascui
But those promoted as skincare, foundation or insect repellent – with terms such as “full or medium coverage”, “reverse the signs of ageing” and “correct the appearance of blemished skin” – were probably not marketed principally for use as sunscreen and should attract GST, it said.
Alex Roslaniec, co-founder of Australian hemp skincare business Hey Bud, said quality sunscreen products should be GST-free regardless of how they were marketed.
He said the draft determination would “automatically” increase the cost of his products by 10 per cent.
Roslaniec said he accepted that some skincare companies were looking to avoid the GST by combining make-up with sunscreen.
But he said his brand shouldn’t be punished for combining strong sun protection – SPF50 and two hours’ water resistance – with “enhanced protection for the skin”.
“For that to get taxed because it has a multi-use doesn’t make sense to me,” Roslaniec said.
Cancer Council national skin cancer committee chair Professor Anne Cust said the best sunscreen was broad-spectrum, water-resistant SPF50 or SPF50+, used and reapplied daily.
“It’s important to know that most cosmetic products, such as make-up or skincare products with SPF, offer either no protection or protection that is much lower than the recommended SPF50 or higher,” she said.
Claire Hamilton and daughters Chloe, 9, (left) and Grace, 7. Credit: Penny Stephens
Melbourne woman Claire Hamilton remembers being extremely sunburnt as a child – but she’s been sun-smart all her adult life.
“I have fair skin, so I burn easily. I always try to wear a hat, sunscreen and stay in the shade,” she said.
In 2014, four months after the birth of her first child, Hamilton booked in for a skin check and the doctor found a melanoma – the deadliest form of skin cancer – on her ankle.
“I was extremely lucky that I got it early, and it hadn’t spread. If I hadn’t had that skin check, it could have been a completely different story,” she said.
“Since then, I have been a lot more conscious when I’m out in the sun. I only wear 50+ sunscreen and make sure my husband and three kids are wearing it, too. I also have the SunSmart app which alerts me when the UV [is too high].”
The ATO said whether a sunscreen product was marketed principally for use as sunscreen was “a matter of overall impression involving an objective assessment of all the marketing”.
“A ‘moisturising sunscreen’ is primarily identified as a sunscreen with a supplementary moisturising benefit,” it said.
“However, ‘SPF moisturiser’ or ‘moisturiser with SPF’ may be a factor indicating the reverse.
“Descriptions of products as multi-use or multi-functional, either explicitly or through descriptors such as ‘2-in-1’ or ‘3-in-1’, are indicative of products with multiple equal uses and no main, chief or predominant marketed use.”
The ATO is considering feedback to its revised guidance.
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