ATO Interpretative Decision
ATO ID 2002/685 (Withdrawn)
Goods and Services Tax
GST and syrup for flavouring coffeeFOI status: may be released
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This ATO ID is withdrawn as the Tax Office position on this issue is contained in the current GST Food Guide (NAT 3338)This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 syrup for flavouring coffee?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies syrup for flavouring coffee. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. The entity supplies syrup for flavouring coffee. The syrup is available in various flavours. It is used specifically in coffee and is marketed for that purpose.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
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.
Subsection 38-4(1) of the GST Act defines food to include, amongst other things:
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- ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act); and
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- 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).
The entity supplies syrup for flavouring coffee. Although the syrup is a flavouring, it is not used to flavour food for human consumption. The syrup is used specifically in coffee, a beverage for human consumption, and is marketed for that purpose . Therefore, paragraph 38-4(1)(e) of the GST Act does not apply and the syrup is an ingredient for a beverage under paragraph 38-4(1)(d) of the GST Act.
However, under paragraph 38-3(1)(d) of the GST Act, a supply of an ingredient for a beverage is not GST-free unless it is an ingredient of a kind that is specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
Item 7 of Schedule 2 (Item 7) of the GST Act lists preparations for drinking purposes that are marketed principally as tea preparations, coffee preparations or preparations for malted beverages. This item applies to the preparations used to make tea, coffee or malted beverages.
The entity's syrup is not a preparation used to make coffee, rather the syrup that is used to add additional flavour to coffee. Therefore, the syrup is not covered by Item 7 and the entity is not making a GST-free supply under section 38-2 of the GST Act.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies syrup for flavouring coffee.
Date of decision: 23 January 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
section 38-2
section 38-3
paragraph 38-3(1)(d)
section 38-4
subsection 38-4(1)
paragraph 38-4(1)(d)
paragraph 38-4(1)(e)
Division 40
Schedule 2 clause 1
Schedule 2 clause 1 table item 7
Keywords
Goods & services tax
GST food
Food for human consumption
Ingredients for beverages
ISSN: 1445-2782
| Date: | Version: | |
| 23 January 2002 | Original statement | |
| You are here | 5 December 2008 | Archived |