ATO Interpretative Decision

ATO ID 2001/197 (Withdrawn)

Goods and Services Tax

GST and halva
FOI status: may be released

Withdrawn. The ATO view for this issue is covered in the GST food guide - Section 3 - Detailed food list.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 halva?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells halva. 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 halva. Halva is a product made from the extract of crushed sesame seeds. The product is sweetened and either vanilla, chocolate, or peanut flavour is added. The product contains sugar.

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

Under section 38-2 of the GST Act a supply of 'food' is GST-free provided that it 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). Halva is considered to be food for human consumption.

However, under paragraph 38-3(1)(c) of the GST Act, a supply of food will not be GST-free if it is food of a kind that is specified in clause 1 of Schedule 1 to the GST Act (Schedule 1).

Halva is not specifically listed in Schedule 1. The item listed in Schedule 1 that is of relevance in this case is item 8 of Schedule 1. Item 8 of Schedule 1 lists, 'confectionery, food marketed as confectionery, food marketed as ingredients for confectionery or food consisting principally of confectionery'.

The issue, therefore, is whether halva falls within the scope of item 8 of Schedule 1.

The term 'confectionery' is not defined in the GST Act and therefore must be given its ordinary meaning. 'Confectionery' is defined in The Macquarie Dictionary (1997) as 'confections or sweets collectively'.

Furthermore, Aickin J in the High Court decision Landau and Anor v. Goldwater and Anor (1976) 13 ALR 192 gave the following general description of confectionery:

'They are primarily small articles of a sweet character containing substantial amounts of sugar and regarded as being in the nature of a delicacy in whatever quantity they may be consumed.'

In this case, halva is of a sweet character, contains sugar and is in the nature of a delicacy. In addition, 'halva' is defined in The Macquarie Dictionary (1997) as 'a sweet confection of Middle Eastern origin, containing honey and sesame seeds'.

Accordingly, halva is considered to be confectionery and falls within the scope of item 8 of Schedule 1. As such, 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 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 sells halva.

Date of decision: 4 June 2001

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)(c)
   paragraph 38-4(1)(a)
   Division 40
   Schedule 1, clause 1
   Schedule 1, clause 1, Item 8

Case References:
Landau and Anor v. Goldwater and Anor
(1976) 13 ALR 192

Other References:
The Macquarie Dictionary 1997, 3rd edition, The Macquarie Library Pty Ltd, New South Wales.

Keywords
Goods and Services Tax
GST free
GST food
Food for human consumption
Taxable supply

Business Line: GST

Date of publication: 14 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	4 June 2001	Original statement
You are here	3 February 2006	Archived

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