Edited version of private ruling

Authorisation Number: 1011586572271

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Ruling

Subject: GST status of almond and seeds protein mix

Question

Is the supply of almond and seeds protein mix GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the almond and seeds protein mix is a GST-free supply of food.

Relevant facts and circumstances

You (an Australian entity) are registered for goods and services tax (GST).

You sell a product which consists of a mixture of non-processed organic almonds, sunflower kernels, organic sesame seeds, and organic linseed ('product').

The product is recommended for use on cereals, porridges and smoothies.

The product will be sold in the breakfast food section.

The product comes in a glass jar.

Information and product packaging indicates that the product (almond and seed mixes) is protein food. Information is provided about the benefits of protein food.

The product is not a powder, and is a mixture of whole and crushed nuts/seeds.

Reasons

GST is payable on a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). You satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act as:

(a) you supply the product for consideration;

(b) the supply is made in the course of your enterprise (business);

(c) the supply is connected with Australia as the product (goods) is made available in Australia; and

(d) you are registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

There is no provision under the GST Act that makes your supply of the product input taxed.

GST-free

Division 38 of the GST Act specifies the types of supplies that are GST-free. 

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.

Section 38-4: definition of food

'Food' is defined in section 38-4 of the Act to include:

· food for human consumption (whether or not requiring further processing or treatment);

· ingredients for food for human consumption;

· *beverages for human consumption;

· ingredients for beverages for human consumption;

· goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents for flavourings);…

(* denotes a defined term under section 195-1 of the GST Act)

Further, paragraph 38-4(1)(h) of the GST Act provides that 'food' does not include any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition.

From the information provided, the product is a mixture of various nuts/seeds that can be used on cereals, porridges and smoothies. The product is marketed as food for humans and sold in the breakfast section. Hence, the product is considered food for human consumption or is an ingredient for food for human consumption, and is not excluded by paragraph 38-4(1)(h) of the GST Act. Accordingly, the product satisfies the definition of food in section 38-4 of the GST Act.

Section 38-3: exclusion

Section 38-3 of the GST Act covers food that is not GST-free.

Under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act.

Of specific relevance to your product, is Item 16 of Schedule 1 to the GST Act (Item 16), which provides that seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way is not GST-free.

From the information provided, the product has not been processed or treated by way of salting, spicing, smoking or roasting, or in any other similar way. Therefore, the product does not fall under Item 16 and is not excluded from being GST-free.

In addition, the product is not excluded from being GST-free under any other item in clause 1 of Schedule 1 to the GST Act.

We note that ingredients for beverages for human consumption (under paragraph 38-4(1)(d) of the GST Act) are only GST-free to the extent that the ingredients are specified in the third column of Schedule 2 of the GST Act. However, products that are not included on Schedule 2 of the GST Act may still be GST-free under one of the other provisions in section 38-4 of the GST Act.

Accordingly, as the product satisfies paragraphs 38-4(1)(a) and/or (b) of the GST Act and is not excluded from being GST-free, the supply of the product is a GST-free supply of food under section 38-2 of the GST Act.

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