Compression socks suppliers, manufacturers, and retailers should classify the product correctly, the Australian Taxation Office (ATO) urged.

The ATO clarified that goods and services tax (GST) applies to compression socks used by the general community to prevent illness or disability or prevent legs and feet from getting tired or swollen.

If business owners have classified general-purpose compression socks and travel socks as GST-free in good faith, there will be no sanctions for tax periods up to and including February 29.

Meanwhile, business owners are encouraged to make a voluntary disclosure if they have classified sports or athletic compression socks and maternity socks as GST-free.

The ATO said that compression socks are only GST-free if specifically designed for people with an illness or disability and are not widely used by the general community without an illness or disability.