Weight loss ... tax gain?

australiaThe Australian Taxation Office has stung dieters who prefer a cool drink to a hot soup as part of their weight-loss program.

Formulated meal replacement shake sachets sold in pharmacies as part of a weight-management program have been hit with the GST.

But, in a twist to the ruling, diet soups have been exempted because they're eaten hot and therefore classified as food.

The case has angered one of Australia's most successful marketers of diet formula, Tony Ferguson, who is challenging the tax office's ruling.

The Pharmacy Guild of Australia has also written to the tax office asking that all diet formula products be GST-free.

Mr Ferguson says there are 250,000 people on his weight-loss program and they are easing the burden on the health system

"It's not uncommon for a person on Type Two diabetes to come off insulin altogether when they are on one of these programs," he said. "There is an enormous benefit to the Australian taxpayer in terms of easing the burden on the Pharmaceutical Benefits Scheme, and that should be recognised."

Mr Ferguson said thousands of pensioners and low-income earners were struggling with the extra charges imposed by the ruling.

The shakes have gone from $2.90 to $3.20 each with dieters taking two a day.

"The extra $4.20 a week can mean a great deal to pensioners." Mr Ferguson said. "Why hit the battlers?

"And why should they be forced to switch to soup in hot weather – there aren't too many people in Townsville having a hot bowl of soup at midday in the summer."

Mr Ferguson said Milo was a popular cold drink sold GST-free, as was baby formula.

The tax office is believed to be communicating extensively with all parties involved while re-examining the issue and a decision is expected early in the new year.

source - The Courier Mail