ATO Interpretative Decision
ATO ID 2001/347
Goods and Services Tax
GST and Nut MixFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 sells raw nut mix?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells raw nut mix.
Facts
The entity is a food supplier that sells nut mix. The nuts used in the mix are raw almond kernels, raw cashew kernels, raw brazil nuts, raw hazelnuts, raw peanuts and raw walnuts. The nuts are shelled and the skin removed by blanching. The nuts have not been processed or treated by salting, spicing, smoking or roasting.
The nut mix is not sold for consumption on the premises from which it is supplied.
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 the supply 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)(a) of the GST Act to include food for human consumption (whether or not requiring processing or treatment). Nut mix is considered to be food for human consumption.
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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods listed in Schedule 1. In this case, item 16 in the table in Schedule 1 is relevant.
Item 16 of Schedule 1 (Item 16) lists seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or 'in any other similar way'. In this case, the nuts in the fruit and nut mix are raw and have not been processed or treated by salting, spicing, smoking or roasting. Therefore, it is necessary to consider whether shelling the nuts and removing their skin by blanching is a process or treatment that is similar to salting, spicing, smoking or roasting.
Where there is a list of two or more specific words, the class rule (ejusdem generis rule) of interpretation may be applied to restrict the meaning of the general words to the same class of the specific words that precede them (Attorney General v. Brown [1920] 1 KB 773).
As such, the otherwise wide meaning of the words 'in any other similar way' is restricted to the same class of the words salting, spicing, smoking and roasting. It is considered that these specific words are all descriptions of types of flavour enhancing processes. In this case, although the nuts are raw, some are shelled and blanched to have their skins removed. The shelling and blanching process does not add to or enhance the flavour of the nuts. Consequently, the nuts are considered not to be treated in a similar way to salting, spicing, smoking or roasting. Therefore, the nuts in the nut mix do not fall under Item 16.
Accordingly, as the nuts combined to form nut mix are not specified in Schedule 1, paragraph 38-3(1)(c) of the GST Act does not exclude the supply of the product from being GST-free. In addition, the supply of the nut mix does 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 sells raw nut mix.
Date of decision: 4 July 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(c)
paragraph 38-4(1)(a)
table item 16 of clause 1 of Schedule 1
Case References:
Attorney General v. Brown
[1920] 1 KB 773
ATO ID 2001/348
Other References:
Food Index
Keywords
Goods and Services Tax
GST free
GST food
Food for human consumption
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 4 July 2001 | Original statement |
| 13 September 2005 | Archived |