ATO Interpretative Decision

ATO ID 2002/13

Goods and Services Tax

GST and bird's nest with sugar
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplies bird's nest with sugar?

Decision

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies bird's nest with sugar.

Facts

The entity is a food supplier. The entity supplies bird's nest with sugar. Bird's nest is a food ingredient derived from birds' nests. It is considered a delicacy in Chinese cooking. It can also be consumed as a tonic.

The bird's nest with sugar is made of sugar solution, bird's nest and stabiliser.

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 it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded by section 38-3 of the GST Act.

The definition of food in section 38-4 of the GST Act includes ingredients food for human consumption (paragraph 38-4(1)(b) of the GST Act). Although bird's nest with sugar can be consumed as a tonic, it is an ingredient for food, and therefore, it is considered that bird's nest with sugar is an ingredient for food for human consumption.

However, under paragraph 38-3(1)(c) of the GST Act, 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). Bird's nest with sugar is not a food of a kind specified in Schedule 1.

In addition, bird's nest with sugar does 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 bird's nest with sugar.

Date of decision: 13 November 2001

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)(b)
   Schedule 1 clause 1

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

Siebel/TDMS Reference Number: CW243227

Business Line: Indirect Tax

Date of publication: 9 January 2002

ISSN: 1445-2782

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