ATO Interpretative Decision

ATO ID 2001/366

Goods and Services Tax

GST and soy milk with sugar added
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 soy milk with sugar added?

Decision

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells soy milk with sugar added.

Facts

The entity is a food supplier that sells soy milk with a small amount of sugar added. The added sugar acts as a sweetener. The soy milk is not flavoured.

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 the supply does not come within any of the exclusions listed in section 38-3 of the GST Act.

Food is defined in paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act to include beverages for human consumption and ingredients for beverages for human consumption. Soy milk with sugar added is considered to be either a beverage for human consumption or an ingredient for a beverage for human consumption.

However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or an ingredient for a beverage is not GST-free unless it is of a kind listed in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). The item from Schedule 2 that is relevant to soy milk is item 4.

Item 4 of Schedule 2 lists 'beverages consisting principally of soy milk or rice milk, but not including flavoured beverages'. In this case, the supply of soy milk with sugar added consists principally of soy milk. The added sugar acts as a sweetener and is not considered to be a flavouring.

As the supply of soy milk with sugar added is covered by item 4 of Schedule 2, the supply is GST-free under section 38-2 of the GST Act.

Date of decision: 20 June 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 38-3(1)(d)
   section 38-4
   Schedule 2 clause 1
   Schedule 2 clause 1 table item 4

Keywords
Goods and services tax
GST-free
GST food
GST beverages
Ingredients for beverages

Siebel/TDMS Reference Number: CW219211

Business Line: Indirect Tax

Date of publication: 29 September 2001

ISSN: 1445-2782

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