ATO Interpretative Decision

ATO ID 2003/1158 (Withdrawn)

Goods and Services Tax

GST and flavoured nuts
FOI status: may be released

This ATO ID is withdrawn as the Tax Office position on this issue is contained in the current GST-food-guide/GST Food Guide (NAT 3338)

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Decision

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

Facts

The entity is a food supplier that sells flavoured nuts. The nuts are for general consumption and can be eaten directly from the packet. The entity uses various ingredients to flavour the nuts.

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 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). Flavoured nuts are food for human consumption and therefore satisfy the definition of food 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). Item 16 in 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.

Salting, spicing, smoking and roasting are all processes that alter the flavour of nuts. The entity uses various ingredients to flavour the nuts. Flavouring of nuts is similar to salting, spicing, smoking or roasting and is therefore covered by Item 16. Accordingly, the supply of the flavoured nuts 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 any other provision of 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 sells flavoured nuts.

Date of decision: 16 May 2003

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)(c)
   section 38-4
   paragraph 38-4(1)(a)
   Division 40
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 16

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

Business Line: GST

Date of publication: 24 December 2003

ISSN: 1445-2782

history

	Date:	Version:
	16 May 2003	Original statement
You are here	12 December 2008	Archived

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