Issue 23

Is the supply of distilled water subject to GST?

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

'Food' as defined will be GST-free in accordance with section 38-2 of the GST Act.

'Food' is defined in subsection 38-4 of the Act to include:

"...(c)   beverages for human consumption;..." 38-4(2)

Subsection 38-4(2) operates to include water as a beverage. Therefore, distilled water satisfies the definition of food. However, section 38-3 of the Act operates to determine those foods that are not GST-free. Reference is made to paragraph 38-3(1)(d) which states:

"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;..."

Schedule 2 of the Act provides a list of beverages that are GST-free. Item 14 of the Schedule lists:

"natural water, non-carbonated and without any other additives"

It therefore needs to be determined whether distilled water is "natural water". The Macquarie Concise Dictionary 3rd Edition defines 'distilled' as "obtained or produced by distillation". It goes on to define 'distillation' as

"1. the volatilization or evaporation and subsequent condensation of a liquid, as when water is boiled in a retort and the steam is condensed in a cool receiver. 2. the purification or concentration of a substance; the obtaining of the essence or volatile properties contained in it, or the separation of one substance from another, by such a process. 3. a product of distilling, a distillate."

Therefore, distilled water is natural water that is non-carbonated and free from any other additives. However, only distilled water that is 'for human consumption' will be GST-free.

Information from industry is that not all distilled water is produced by the same process. Some of the production facilities are in food factories, which allows for the product to be used for human consumption. Distilled water that is not bottled in a food factory cannot be labelled as 'suitable for drinking'. Therefore distilled water that is not suitable for drinking will be subject to GST.


A bottle of distilled water that has a label stating:


  • Steam irons
    • Batteries
    • Air conditioners
    • Laboratory purposes

will be subject to GST, as it is not a supply of 'beverages for human consumption' - paragraph 38-4(1)(b).

End of example
    Last modified: 05 Aug 2016QC 16451