GST issues registers

Food industry partnership

Issue 19 – Concentrated fruit juice and concentrated fruit drinks

For source of ATO view, refer to:

•

GSTD 2002/2 - Goods and services tax: what supplies of fruit and vegetable juices are GST-free?

•

Detailed food list

For GST classification purposes, it is important to ensure that the correct product is being considered. When determining the status of fruit juice concentrates, it is necessary to consider the product being sold, which is the packaged concentrate.

Generally a supply of food will be GST-free in accordance with section 38-2 of the GST Act. 'Food' is defined in section 38-4 of the Act to include:

'(c)

beverages for human consumption;

(d)

ingredients for beverages for human consumption;'

In order for beverages (or ingredients for beverages) to be GST-free, they must be specifically included in Schedule 2 of the GST Act. In determining whether fruit concentrates are GST-free, Item 10 of Schedule 2 of the GST Act is relevant:

'concentrates for making non-alcoholic beverages, if the concentrates consist of at least 90% by volume of juices of fruits'

As can be seen, this item in the GST Act requires a concentrate to satisfy three tests before it will be classified as GST-free. These are:

1.

The concentrate must be used for making non-alcoholic beverages; and

2.

The concentrate must comprise juices of fruits; and

3.

The concentrate must be at least 90% by volume of juices of fruit.

These tests do not require consideration to be given to the degree of concentration of the fruit juice contained in the product.

In determining whether fruit juice concentrates and concentrated fruit drinks are GST-free, it is necessary to look at the composition of each of these products:

Concentrated fruit juice

These products in the main contain concentrated fruit juice, and when reconstituted return to a 'pure fruit juice' state. Generally, they do not contain sugar or other additives, other than a small amount of preservatives and vitamin C. When the contents of the package are examined, the concentrated fruit juice generally makes up more than 90% by volume of the contents of the package in which they are supplied.

Provided that the product contains at least 90% by volume of concentrate, it is not for making alcoholic beverages and it contains concentrated juices of fruit, then the product will be GST-free.

Concentrated fruit drink

These products are different to fruit juice concentrates in that they contain further additives such as sugar. When considered in their entirety, the volume of concentrated fruit juice in these products is generally less than 90% by volume of the total contents in the package. The other additives, which commonly include sugar, preservatives, food acids etc are usually in excess of 10% of the total volume of products supplied. As a result, these products are taxable.

The classification of these products is not determined by either:

1.

The degree of concentration of the juice (that is, It does not matter whether it is 150%, 400% or any other degree of concentration); or

2.

The degree of concentration once the product is reconstituted (for example,. 35% juice).

It should be noted that Item 10 of Schedule 2 refers only to 'juices of fruit'. Therefore concentrates that consist of juices of vegetables will not be GST-free.

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