ATO Interpretative Decision

ATO ID 2002/34

Goods and Services Tax

GST and blended raw nut product
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a blended raw nut product?

Decision

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies a blended raw nut product.

Facts

The entity is a food supplier. The entity supplies a blended raw nut product.

The blended raw nut product is achieved by mixing and blending raw materials. The raw materials have not been processed or treated by salting, spicing, smoking or roasting, or processed or treated in any other similar way. The blended raw nut product is to be used as a meal replacement. It is not to be cooked or heated and it is to be added to milk, water, fruit juice, yoghurt, fruit salad, ice-cream or any cold food or drink.

The blended raw nut product is food for human consumption.

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.

Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a) of the GST Act). The blended raw nut product is food for human consumption, and therefore, satisfies the definition of food contained in paragraph 38-4(1)(a) 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), or
•: food that is a combination of one or more foods, at least one which is food of such a kind.

Item 16 of Schedule 1 (Item 16) lists seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or 'in any other similar way'.

In this case, the nuts in the blended raw nut product are raw and have not been processed or treated by salting, spicing, smoking or roasting, or processed or treated in any other similar way. Therefore, the blended raw nut product is not covered by Item 16; nor is it covered by any of the other items in the table in Schedule 1. Accordingly, the supply of the blended raw nut product is not excluded from being GST-free under paragraph 38-3(1)(c) of the GST Act.

In addition, the supply of the blended raw nut product 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 the blended raw nut product.

Date of decision: 22 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)(a)
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 16

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

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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