ATO Interpretative Decision
ATO ID 2002/912
Goods and Services Tax
GST and the supply of food grade fish as baitFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 commercial fisherman, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when they supply food grade fish as bait?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act, when they supply food grade fish as bait. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a commercial fisherman. The entity supplies fresh, unprocessed, food grade fish as bait. The fish are not alive when sold.
The entity is registered for goods and services tax (GST) and 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.
Food is defined in section 38-4 of the GST Act to include food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). The entity is supplying food grade fish, which is fit for human consumption. However, the entity is not supplying the fish as food for human consumption. The entity is supplying the fish as bait.
If a supplier differentiates a product to be supplied as food from a product to be supplied for industrial or other non-food uses, the latter supply is not considered to be a GST-free supply of food under section 38-2 of the GST Act. Some of the ways in which a dual-purpose food product is considered to be differentiated for a non-food use are:
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- designation as something other than food;
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- storage in conditions or containers that are unsuitable for food;
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- labelling, invoicing or marketing as a non-food product; or
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- delivery in a manner unsuitable for food.
Although the entity is supplying fish that is food grade and could be used as food for human consumption, it has differentiated the product by supplying it as bait. As such, the supply of the fish is not a supply of food for human consumption despite the fact that the fish is of food grade quality, and therefore, does not amount to food for the purposes of section 38-4 of the GST Act. Accordingly, the entity is not making a GST-free supply under section 38-2 of the GST Act when they sell food grade fish as bait.
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 of the other provisions 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 they sell food grade fish as bait.
Date of decision: 15 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
section 38-4
paragraph 38-4(1)(a)
Division 40
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782