ATO Interpretative Decision

ATO ID 2002/1051

Goods and Services Tax

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

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 fat, bone and meat off-cuts that are fit for human consumption?

Decision

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies fat, bone and meat off-cuts that are fit for human consumption.

Facts

The entity is a food supplier. The entity supplies fat, bone and meat off-cuts that are fit for human consumption and supplied for that purpose. The off-cuts are used by the purchaser to make tallow and meat meal for use as chicken feed.

At the time of supply, the entity does not differentiate the off-cuts as having a non-food use.

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 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) and ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act).

In determining whether a supply is a supply of food, it is not only the physical characteristics of the product that are important but also the nature of the supply. Some of the ways in which a product with the physical characteristics of food could be differentiated as having a non-food nature are:

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designation as something other than food;

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pre-delivery storage in conditions or containers that are unsuitable for food;

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packaging in a non-food type of package or container;

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labelling, invoicing or marketing as a non-food product;

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delivery in a manner unsuitable for food.

The entity supplies fat, bone and meat off-cuts. At the time of the supply, the off-cuts are not differentiated as having a non-food use, are fit for human consumption and are supplied for that purpose.

There is no requirement for the entity to determine how the recipient will use the supply. Therefore, the fact that the recipient uses the fat, bone and meat off-cuts to make tallow and meat meal that is used as chicken feed is not relevant.

Accordingly, the off-cuts are food or ingredients for food for human consumption and therefore, satisfy the definition of food in paragraphs 38-4(1)(a) or 38-4(1)(b) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Fat, bone and meat off-cuts are not food of a kind specified in Schedule 1.

In addition, the fat, bone and meat off-cuts do 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 under section 38-2 of the GST Act when it supplies fat, bone and meat off-cuts that are fit for human consumption.

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
   paragraph 38-4(1)(a)
   paragraph 38-4(1)(b)
   Schedule 1 clause 1

Keywords
Goods and services tax
GST free
GST food
Food for human consumption
Ingredients for food

Business Line:  GST

Date of publication:  20 November 2002

ISSN: 1445-2782