ATO Interpretative Decision
ATO ID 2004/372
Goods and Services Tax
GST and dried bamboo leaves used to wrap and flavour foodFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 dried bamboo leaves used to wrap and flavour food while cooking?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies dried bamboo leaves used to wrap and flavour food while cooking.
Facts
The entity is a food supplier. The entity supplies dried bamboo leaves that are used in cooking Asian foods such as dumplings, cakes and puddings.
The dried bamboo leaves are softened by soaking them in water. The bamboo leaves are then used to wrap all the ingredients together for cooking. In the cooking process, the bamboo leaves add a special flavour to the food in a similar way as other spices. The bamboo leaves are not consumed, they are discarded before the cooked food is eaten.
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 goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings) (paragraph 38-4(1)(e) of the GST Act).
Although the dried bamboo leaves are discarded before consumption, the leaves are used to wrap all the ingredients together for cooking and the leaves add a special flavour to the food in the cooking process. As such, the dried bamboo leaves are goods added to food for human consumption and satisfy the definition of food in paragraph 38-4(1)(e) 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). Dried bamboo leaves are not food of a kind specified in Schedule 1.
In addition, the dried bamboo leaves do not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies dried bamboo leaves used to wrap and flavour food while cooking.
Date of decision: 02 May 2002
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)(e)
Schedule 1 clause 1
Keywords
Goods and services tax
GST free
GST food
Food for human consumption
Food seasoning
ISSN: 1445-2782