ATO Interpretative Decision

ATO ID 2002/712 (Withdrawn)

Goods and Services Tax

GST and the supply of food grade fish as bait
FOI status: may be released

This ATO ID is withdrawn from 18 September 2002 and replaced by ATO ID 2002/912. ATO ID 2002/712 is withdrawn because it gives the impression that the purpose for which the supply is used is significant when the important factor is what is in fact supplied. In addition, the ATO ID is also not clear that while the fish supplied as bait is fit for human consumption the fact it is supplied as bait and not as food to be consumed affects the GST status of the supply

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

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 commercial fisherman, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when they supply food grade fish for use as bait?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act, when they supply food grade fish for use as bait. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a commercial fisherman. The entity supplies fresh, unprocessed, food grade fish exclusively for use as bait. The fish are not alive when sold.

The entity is registered for goods and services tax (GST) and 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 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). The entity is supplying food grade fish, which is fit for human consumption. However, the entity is not supplying the fish for that purpose. The entity is supplying the fish for use as bait. Therefore, the entity is supplying a product that can be used for both food and non-food applications.

If a supplier differentiates a product to be supplied as food from a product to be supplied for industrial or other non-food uses, the latter supply is not considered to be a GST-free supply of food under section 38-2 of the GST Act. Some of the ways in which a dual-purpose food product is considered to be differentiated for a non-food use are:

•: designation as something other than food;
•: storage in conditions or containers that are unsuitable for food;
•: labelling, invoicing or marketing as a non-food product; or
•: delivery in a manner unsuitable for food.

The entity designates the fish as something other than food when they supply the fish for use as bait. As such, the fish is not food for human consumption despite the fact that the fish is of food grade quality, and therefore, does not amount to food for the purposes of section 38-4 of the GST Act. Accordingly, the entity is not making a GST-free supply under section 38-2 of the GST Act when they sell food grade fish for use as bait.

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 any of the other provisions in 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 they sell food grade fish for use as bait.

Date of decision: 15 January 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-2
   section 38-3
   section 38-4
   paragraph 38-4(1)(a)
   Division 40

Related ATO Interpretative Decisions
ATO ID 2001/214

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

Business Line: GST

Date of publication: 31 July 2002

ISSN: 1445-2782

history

	Date:	Version:
	15 January 2002	Original statement
You are here	18 September 2002	Archived

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