ATO Interpretative Decision

ATO ID 2002/980 (Withdrawn)

Goods and Services Tax

GST and supply of cola essence
FOI status: may be released

The ATO view for this issue is covered in the GST food guide - Section 3 - Detailed food list - Syrups for use only to flavour beverages and Food Industry Partnership - Issues Register - Issue 10 - Ingredients for beverages.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 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 cola essence?

Decision

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

Facts

The entity is a food supplier. The entity supplies cola essence. The cola essence is a syrup that is supplied as an ingredient for a beverage for human consumption.

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 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.

Subsection 38-4(1) of the GST Act defines food to include ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act). The cola essence is supplied as an ingredient for a beverage for human consumption and therefore, satisfies paragraph 38-4(1)(d) of the GST Act.

However, under paragraph 38-3(1)(d) of the GST Act, a supply of an ingredient for a beverage is not GST-free unless it is an ingredient of a kind that is specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).

Cola essence is not listed in Schedule 2. Therefore, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies cola essence.

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 other provision 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 it supplies cola essence.

Date of decision: 30 April 2002

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

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

Business Line: GST

Date of publication: 23 October 2002

ISSN: 1445-2782

history

	Date:	Version:
	30 April 2002	Original statement
You are here	28 October 2005	Archived

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