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Edited version of private ruling
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Ruling
Subject: GST and fruit juices
Question:
Is the supply of the fruit juice GST-free?
Answer:
Yes.
Relevant facts:
You are registered for goods and services tax (GST).
The labels information is as follows:
It tastes good and is healthy to drink.
Contains 100% juice from juice extract, juice concentrate and extract.
The label advises that the fruit juice is not for the treatment of disease or has curative or remedial properties.
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 from being GST-free by section 38-3 of the GST Act.
You have asked us to consider whether the fruit juice is GST-free under section 38-2 of the GST Act. This is our response:
Food is defined in section 38-4 of the GST Act to include beverages for human consumption (paragraph 38-4(1)(c) of the GST Act).
Beverages
Beverage is defined in subsection 38-4(2) of the GST Act to include water. The ATO view on beverages is outlined in paragraphs 5 to 8 of the Goods and Services Tax Determination 2002/2. We enclose a copy for your reference. These paragraphs state:
5. The GST Act defines beverage to include water, but does not otherwise discuss the
meaning of a beverage. The word beverage appears in a similar context in the former sales tax legislation and has been considered by the courts to mean 'a drink of any kind' and, in turn, drink as 'any liquid which is swallowed to quench thirst or for nourishment.'
6. For something to be a drink, it must be a liquid to be swallowed:
§ to quench thirst; or
§ for nourishment.
7. A liquid providing nourishment will sustain life by assisting in growth or providing
energy. A nutritional purpose may be contrasted with a medicinal purpose which arises where a liquid is provided for the treatment of disease or has curative or remedial properties.
8. Liquids that are consumed other than to quench thirst or for nourishment (for
example, liquids consumed for medicinal purposes) do not satisfy the requirements of Items 11 or 12 of Schedule 2.
Fruit Juice
You advise that fruit juice is a blend of natural fruit juice concentrates. The fruit juice is all natural, tastes good and is healthy to drink. The label also advises that the fruit juice is not a liquid to be used for the treatment of diseases or has curative or remedial properties.
Therefore we consider that the fruit juice satisfies the definition of food under section 38-4 of the GST Act as it is a beverage for human consumption. It is a liquid to be consumed for nourishment and not for the treatment of diseases or has curative or remedial properties. Therefore the fruit juice is a beverage for human consumption under paragraph 38-4(1)(c) of the GST Act.
Beverages not GST-free
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, a supply of a beverage (or ingredient for a beverage of a kind) is GST-free if it is specified in Schedule 2 of the GST Act.
Beverages specified in Schedule 2 of the GST Act
The following beverages are listed under fruit and vegetable juice category in Schedule 2 of the GST Act
Items |
Category |
Beverages |
10 |
Fruit and vegetable juices |
concentrates for making non-alcoholic *beverages, if the concentrates consist of at least 90% by volume of juices of fruits |
11 |
non-alcoholic carbonated *beverages, if they consist wholly of juices of fruits or vegetables | |
12 |
non-alcoholic non-carbonated *beverages, if they consist of at least 90% by volume of juices of fruits or vegetables |
* denotes a defined term in the GST Act
GSTD 2002/2 notes that it is the labelling of a product that will indicate its constituents. The labelling submitted shows that reconstituted juices in the product are in excess of the 90% requirement in item 12 in Schedule 2 of the GST Act. It follows that additives such as preservatives, sugar etc must be less than 10% of the product. The label states "Contains 100% juice from juice extract, juice concentrate and extract". Therefore we consider that the fruit juice contains at least 90% by volume of juices of fruits and is a beverage under item 12 in Schedule 2 of the GST Act. The supply of the fruit juice is therefore GST-free under section 38-2 of the GST Act.
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