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Edited version of private ruling
Authorisation Number: 1011585545725
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Ruling
Subject: GST and imported drink mix concentrates
Question
Is the importation of drink mix concentrates a non-taxable importation?
Answer
Only two of the drink mix concentrates imported satisfy the requirements to be a non-taxable importation. A non-taxable importation is not subject to GST.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are registered for GST.
You import non-alcoholic drink mix concentrates. None of the concentrates are imported or sold as 'ready to drink'.
You advise that one of the drink mix concentrates is GST-free under item 7 of Schedule 1 to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and as such, not an issue to be determined in this ruling request.
The other drink mix concentrates and their juice percentage by volume of concentrate are as follows:
§ the concentrates are ready to mix with water to make a drink.
§ some of the concentrates are frozen so that they do not go off while in transit.
§ the concentrates are put in dispensers.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
Only two of the drink mix concentrates that you import satisfy the requirements of item 10 in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2) of containing at least 90% by volume of juices of fruits.
Therefore, these two drink mix concentrates are GST-free under section 38-2 of the GST Act and as such, are a non-taxable importation under section 13-10 of the GST Act. A non-taxable importation is not subject to GST.
All of the other drink mix concentrates that you import do not come within the scope of item 10 of Schedule 2 and as such, are not a non-taxable importation. Instead, these drink mix concentrates are taxable importations and as such, subject to GST.
Detailed reasoning
Section 13-15 of the GST Act provides that you must pay GST on any taxable importation that you make.
Under subsection 13-5(1) of the GST Act, you make a taxable importation if:
§ goods are imported, and
§ you enter the goods for home consumption (within the meaning of the Customs Act 1901).
However, an importation is not a taxable importation to the extent that it is a
non-taxable importation.
Section 13-10 of the GST Act provides that an importation is a non-taxable importation if, among other things, it would have been a GST-free supply had it been a supply.
Of relevance to this case is section 38-2 of the GST Act which provides that a supply of food is GST-free.
The term 'food' is defined in section 38-4 of the GST Act to include:
§ beverages for human consumption, and
§ ingredients for beverages for human consumption.
However, paragraph 38-3(1)(d) of the GST Act provides that a supply of a beverage or an ingredient for a beverage is not GST-free under section 38-2 of the GST Act, unless it is of a kind specified in Schedule 2.
This means that for your drink mix concentrates to be GST-free, they must come within one of the items specifically listed in Schedule 2.
Item 10 of Schedule 2 lists the following as GST-free:
concentrates for making non-alcoholic beverages, if the concentrates consist of at least 90% by volume of juices of fruits
Goods and Services Tax Determination GSTD 2002/2 provides more information on the requirements of item 10 of Schedule 2. At paragraphs 9 and 10, GSTD 2002/2 states:
9. Item 10 provides that certain concentrates for making beverages can be supplied GST-free, where they are for making non-alcoholic beverages. These products contain concentrated fruit or vegetable juices, and when reconstituted by the addition of water, return to a drinkable 'pure juice' state. However, to be supplied GST-free, the concentrate must consist of at least 90% by volume of juices of fruits or vegetables.
10. The labelling of a product will indicate whether the concentrate either comprises more than 10% of sugar or other additives, such as preservatives and vitamin C, and therefore is subject to GST, or whether it consists of 90% or more of fruit or vegetable juices and is GST-free.
Therefore, for a product to fall within item 10 of Schedule 2, the concentrate must:
§ be used for making non-alcoholic beverages
§ comprise juices of fruits, and
§ be at least 90% by volume of juices of fruits.
In this case, the drink mix concentrates that you import are used for making non-alcoholic beverages and contain juices of fruits. However, the juice percentage by volume of concentrate information that you supplied in relation to each drink mix concentrate shows that not all of the concentrates contain at least 90% by volume of juices of fruits.
In fact, only two of the drink mix concentrates that you import satisfy the requirement in item 10 of Schedule 2 of containing at least 90% by volume of juices of fruits and such as, are GST-free under section 38-2 of the GST Act.
All of the other drink mix concentrates that you import contain less then 90% by volume of juices of fruits and therefore, do not come within the scope of item 10 of Schedule 2. As such, they are not GST-free under section 38-2 of the GST Act and as a result, are not a non-taxable importation. Instead, these drink mix concentrates are taxable importations and as such, subject to GST.
In conclusion, only are a non-taxable importation under section 13-10 of the GST Act and as such, the importation of these two drink mix concentrates are not subject to GST.
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