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Edited version of your private ruling
Authorisation Number: 1012558574708
Ruling
Subject: Flavoured milk
Question
Is the supply of the flavoured milk GST-free?
Advice:
No
Relevant facts:
· You are registered for goods and services tax (GST).
· You supply milk products as ingredients for flavoured milk drinks.
· The milk product is supplied in powder form.
· The ingredients in the milk product consist of milk powder, flavours and sweetener
· The packaging advises consumer to add water to prepare the milk drink.
· The flavoured milk is marketed as milk beverages.
Reasons for decision
A supply of food is GST-free under section 38-2 of the GST Act provided that the supply does not come within any of the exclusions listed in section 38-3 of the GST Act.
Food is defined in paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act to include beverages for human consumption and ingredients for beverages for human consumption. The milk products satisfy the definition of foods as they are ingredients for milk beverages for human consumption.
However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or as an ingredient for a beverage is not GST-free unless it is of a kind listed in the table in clause 1 of Schedule 2 of the GST Act (Schedule 2).
Powdered milk is listed under item 1of Schedule 2 (Item 1) and is therefore not excluded from being GST-free by paragraph 38-3(1)(d) of the GST Act. However, item 2 of Schedule 2 (item 2) lists milk products referred to in Item 1 (or a combination of those products) but not including flavoured beverages. Therefore flavoured milk is specifically excluded from milk products listed under items 1 and 2.
The ingredients in the milk powder are milk solids with flavouring ingredients. The milk powder is an ingredient for making flavoured milk drink. The flavoured milk powder is specifically excluded milk products listed in Schedule 2 by item 2 and is therefore excluded from being GST-free by paragraph 38-3(1)(d) of the GST Act.
The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.
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