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Edited version of private ruling

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Ruling

Subject: GST and fruit juice

Question:

Will the supply of the following products be GST-free?

Answer:

Yes, the supply of X product is GST-free.

No, the supply of Y product is not GST-free.

Relevant facts:

The following are the facts you provided and information from your website.

You are registered for GST.

You have been importing X and Y products.

You sell these products through a multi-level network marketing plan.

X product - natural juice blend

The product includes the following label information:

X product is 100 percent juice and nutrient solids. There is no water added. You can enjoy X product in its full strength. Alternatively, if you prefer a lighter drink, mix your favourite beverage with the product.

Serving suggestion: 30mL per day. Serve chilled. Refrigerate after opening.

You have provided the product information:

Y product

The product includes the following label information:

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 beverages for human consumption (paragraph 38-4(1)(c)).

X product

We accept that the X product is supplied as a beverage. Therefore, as a beverage for human consumption your product satisfies paragraph 38-4(1)(c) of the GST Act.

However, under paragraph 38-3(1)(d) of the GST Act, a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind that is specified in the third column in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2) is not GST-free. That is the beverage or ingredient for a beverage of a kind must fall under Schedule 2 to be GST-free.

You have advised us that your product consists of fruit extracts total about 100%. Of most relevance to your product on Schedule 2 is Item 12 which states 'non-alcoholic non-carbonated beverages, if they consist of at least 90% by volume of juices of fruits or vegetables'. Your product is a concentrated juice and as a consequence, it falls under Item 12 of Schedule 2. In addition, there are no other exclusions under section 38-3 that would prevent X product from being GST-free.

Consequently, when you supply X product you are making a GST-free supply under section 38-2 of the GST Act.

Y product

The word 'food' in paragraph 38-4(1)(a) is not itself defined and so will bear its ordinary meaning. The Macquarie Dictionary 3rd edition, defines 'food' as:

We need to be satisfied that your products can be identified as food.

The Food Industry Partnership Issues Register is a register of food issues the Tax Office has determined and can be found on our website

Issue 21 Are vitamins and minerals considered to be food? states:

However, not all substances that provide nourishment will satisfy the definition of food in the GST Act.

Vitamins and minerals are supplied in various forms:

Unlike food, vitamins and minerals are 'taken', not eaten. Instructions are often provided with the product including a recommended dosage and suggesting that the product be taken at certain times of the day, either on an empty stomach or with food or a beverage, such as water or juice. Often these products are taken for therapeutic or medicinal reasons, or to prevent or compensate for a nutritional deficiency.

Vitamins and minerals are commonly taken by swallowing or in some instances may be added to food.

It is considered that the essential character of vitamins and minerals is not that of food, but that of a supplement. Therefore, for GST purposes, vitamins and minerals are not considered to be food for human consumption under paragraph 38-4(1)(a) of the GST Act.

Whilst X product is based on powdered fruits, the essential character of your product is more akin to vitamin and mineral preparations than food in that they:

X product have recommended dosage and how often it should be taken

Your X product is not identified as fruit powder based food and therefore do not satisfy paragraph 38-4(1)(a) of the GST Act.

Therefore, the supply of this product will not be GST-free under section 38-2 of the GST Act.

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