ATO Interpretative Decision
ATO ID 2002/164
Goods and Services Tax
GST and virgin coconut oilFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies virgin coconut oil?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies virgin coconut oil.
Facts
The entity is a food supplier. The entity is supplying virgin coconut oil in bulk containers.
The coconut oil is raw, unprocessed and solid. The virgin coconut oil is food grade and stored in sealed containers in accordance with food standards and health regulations. The oil is supplied and used as an ingredient for food for human consumption and has a wide range of other uses including in soaps, cosmetics and medicinal products. The oil is not differentiated in any way when supplied to industries other than the food industry.
The entity is registered for goods and services tax (GST).
Reasons for Decision
A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded from being GST-free by section 38-3 of the GST Act.
Food is defined in section 38-4 of the GST Act to include 'ingredients for food for human consumption' (paragraph 38-4(1)(b) of the GST Act).
The virgin coconut oil is food grade, stored in accordance with applicable food standards and health regulations, and supplied and used as an ingredient for food for human consumption. When the virgin coconut oil is supplied to industries other than the food industry, the product is not differentiated in any way. Therefore, the virgin coconut oil that the entity is supplying is an ingredient for food for human consumption and falls within the meaning of food under paragraph 38-4(1)(b) of the GST Act.
However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Virgin coconut oil is not food of a kind specified in Schedule 1. Furthermore, none of the other exclusions contained in section 38-3 of the GST Act prevent the supply of the virgin coconut oil from being GST-free.
Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies the virgin coconut oil.
Date of decision: 4 December 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(c)
section 38-4
paragraph 38-4(1)(b)
Schedule 1 clause 1
Keywords
Goods & services tax
GST-free
GST food
Ingredients for food
ISSN: 1445-2782