ATO Interpretative Decision

ATO ID 2002/33

Goods and Services Tax

GST and dry-roasted seeds
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 dry-roasted seeds?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies dry-roasted seeds. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a food supplier that supplies dry-roasted seeds.

The seeds are dry-roasted in the oven from raw processed sunflower seeds, pumpkin seeds and sesame seeds. The dry-roasted seeds are food for human consumption. The dry-roasted seeds are marketed as an accessory to a meal, for example to be sprinkled on salad or soup.

The dry-roasted seeds are packaged into various combination of seeds.

The dry-roasted seeds are not sold for consumption on the premises from which they are supplied.

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

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 subsection 38-4(1) to include food for human consumption. The dry-roasted seeds are considered to be 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). In this case, item 16 in the table in Schedule 1 (Item 16) is relevant.

Item 16 lists seeds or nuts that have been processed or treated by salting, spicing smoking or roasting, or in any other similar way. The seeds are dry-roasted in the oven and are therefore covered by Item 16. Accordingly, the supply of the dry-roasted seeds is not GST-free 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 supplies dry-roasted seeds.

Date of decision: 22 November 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-2
   section 38-3
   subsection 38-3(1)
   paragraph 38-4(1)(c)
   Division 40
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 16

Keywords
Goods & services tax
GST free
GST food
Food for human consumption
GST supplies & acquisitions
Taxable supply

Business Line: GST

Date of publication: 24 January 2002

ISSN: 1445-2782

history

	Date:	Version:
You are here	22 November 2001	Original statement
	14 October 2005	Archived

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