Issue 15

Is ice considered to be food for human consumption and therefore GST-free?

For source of ATO view, refer to the Detailed food list.

In order to determine whether ice is food for the purposes of the GST legislation it is necessary to examine Subdivision 38-A, Schedule 1 - "Food that is not GST-free" and Schedule 2 – "Beverages that are GST-free" of A New Tax System (Goods and Services Tax) Act 1999 ("the Act").

Section 38-2 of the Act states that a supply of food is GST-free. "Food" is defined in section 38-4 of the Act to mean:

"(1) Food means any of these, or any combination of any of these:

(a) food for human consumption (whether or not requiring processing or treatment);
(b) ingredients for food for human consumption;
(c) beverages for human consumption;
(d) ingredients for beverages for human consumption;...

(2) Beverage includes water."

A supply of food is not GST-free in accordance with section 38-3 of the Act if it is a supply of:

"(c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or
(d) a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2; or ..."

Ice is not specifically listed in either Schedule 1 or Schedule 2 of the Act.

Water is GST-free as it is specifically included in subsection 38-4(2) as a beverage, and by virtue of this inclusion, considered to be a food. If water were not included in this way, it would not be considered as a food or beverage. In a similar way, ice is not considered to be food for human consumption.

It should be noted that although ice was exempt from sales tax, it was not classified as food. Schedule 1 of The Sales Tax (Exemption and Classification) Act 1992 includes a reference to food, water and ice. However, ice is not included in the Chapter of the Schedule that specifies "food for human consumption" as being exempt for sales tax purposes. Chapter 7 of the Schedule covers Food and drink for human consumption while ice is listed under Chapter 15 Miscellaneous. For the purposes of the sales tax legislation, water was also listed under Chapter 15.

Ice is not considered a beverage, as it is not a liquid. Only those beverages that are specifically included in Schedule 2 of the GST Act are GST-free. Further, ice is not considered to be a food as it has no nourishment, no calories and no energy. Ice is generally used for cooling and storage purposes.

As a consequence of the above, a supply of ice will be subject to GST.

Further to this, where ice forms part of another supply, for example, fish is packed on ice or ice is added to a drink, the ice is generally supplied for no consideration. However, where there is a separate charge for the ice, section 9-80 will operate to treat the supply as a mixed supply.

    Last modified: 05 Aug 2016QC 16451