ATO Interpretative Decision
ATO ID 2001/213
Goods and Services Tax
GST and Yoghurt Starter PowderFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 yoghurt starter powder?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells yoghurt starter powder.
Facts
The entity is a food supplier. The entity is selling yoghurt starter powder.
The product is used as a starting material for the manufacture of yoghurt. It can also be consumed directly.
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 provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.
Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of most relevance to this case is paragraph 38-4(1)(a) of the GST Act and paragraph 38-4(1)(b) of the GST Act.
Paragraph 38-4(1)(a) of the GST Act provides that food includes food for human consumption (whether or not requiring further processing or treatment). Paragraph 38-4(1)(b) of the GST Act provides that food includes ingredients for food for human consumption. Yoghurt starter powder can be used either as an ingredient for making yoghurt or consumed as food on its own. Therefore, the yoghurt starter powder satisfies the definition of food contained in paragraph 38-4(1)(a) of the GST Act and 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 that is specified in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 29 in the table in Schedule 1 provides that frozen yoghurt is not GST-free.
Yoghurt starter powder does not fall within item 29 in the table in Schedule 1, as it is not frozen yoghurt.
In addition, the supply of the yoghurt starter powder 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 of yoghurt starter powder under section 38-2 of the GST Act.
Date of decision: 8 November 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
subsection 38-4(1)
paragraph 38-4(1)(a)
paragraph 38-4(1)(b)
Schedule 1
Schedule 1 clause 1 table item 29
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
Ingredients for food
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 8 November 2001 | Original statement |
| 2 September 2005 | Archived |