ATO Interpretative Decision
ATO ID 2001/450
Goods and Services Tax
GST and lactose used in home brewingFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a supplier of home brew products, making a GST-free supply under section 38-2 of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act), when it supplies lactose as an ingredient for making alcoholic home brew?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies lactose as an ingredient for making alcoholic home brew.
Facts
The entity is a supplier of home brew products. The entity sells lactose that is packaged, labelled and sold for use in making alcoholic home brew.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Generally, a supply of food is GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.
Food is defined in paragraph 38-4(1)(d) of the GST Act to include ingredients for beverages for human consumption. In this case, lactose is used as an ingredient to make alcoholic home brew. Therefore, it falls within the definition of food as it is an ingredient for a beverage for human consumption.
However, under paragraph 38-3(1)(d) of the GST Act, the supply of an ingredient for a beverage is only GST-free if it is an ingredient of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
Lactose is listed at item 3 of Schedule 2. It is irrelevant whether the lactose is sold for use in making an alcoholic or non-alcoholic beverage. Accordingly, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies lactose as an ingredient for beverages for human consumption.
Date of decision: 11 September 2001
Legislative References:
A New Tax System (Goods & Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(d)
paragraph 38-4(1)(d)
Schedule 2 clause 1
Schedule 2 clause 1 table item 3
ATO ID 2001/438 ATO ID 2001/439 ATO ID 2001/440 ATO ID 2001/441 ATO ID 2001/442 ATO ID 2001/450
Other References:
Food Industry Issues Register - Issue 24
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
GST beverages
Ingredients for beverages
Taxable supply
ISSN: 1445-2782