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Edited version of private ruling
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Ruling
Subject: GST and flavour-infused skewers
Question
What is the goods and services tax (GST) status of a supply of flavour-infused skewers?
Advice/Answer
The supply of the flavour-infused skewers is GST-free.
Relevant facts
You are selling a type of flavour-infused skewers.
The timber skewers are impregnated with marinades, which are activated by the heat from heating sources in or on which the food is cooked - ovens, grills, open fires or barbeque hot plates.
Marketing of the product is largely directed towards its flavouring properties, although the nature of the skewers allows it to be also used as a conventional skewer. In many instances however, the skewers are not used as conventional skewers at all. This is borne out by the images on the product packaging.
You further advised that the price of the skewers and the intensity of the flavours would make the skewers unsuitable for conventional skewer usage.
Reasons for decision
A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (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 ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act).
The flavour-infused skewers are not consumed; rather meat is threaded on to the skewers and then cooked. In this situation the various flavours and other constituents are distilled from the skewers to flavour the meal.
The flavour-infused skewers are used as a support for food during cooking and they also provide flavour to the food during the cooking process. The ingredients flavouring the skewers that delivered by the skewers are considered to be ingredients for food for human consumption and satisfy the definition of food under paragraph 38-4(1)(b) of the GST Act.
However, a supply of food which falls under section 38-3 of the GST Act is not GST-free under section 38-2 of the GST Act.
Paragraph 38-3(1)(c) of the GST Act specifies food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Flavoured skewers are not specifically listed in Schedule 1 and they do not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore the supply of the flavour-infused skewers is GST-free under section 38-2 of the GST Act.
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