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Edited version of your written advice
Authorisation Number: 1012774200343
Ruling
Subject: Fruit juice
Question 1
Is the supply of the fruit juice GST free?
Answer
No
Facts
• You are registered for goods and service tax (GST)
• You supply fruit juice to school children.
• The juice contains less than 90% juices of fruit.
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 section 38-4 of the GST Act to include beverages for human consumption (paragraph 38-4(1)(c) of the GST Act). The fruit juice is marketed as fruit juice for children. Therefore the fruit juice satisfies the meaning of food as it is a beverage for human consumption (paragraph 38-4 (1)(c) of the GST Act)
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). The relevant items in Schedule 2 that may apply to the fruit juice is items 10, 11, 12 and 13.
Fruit and vegetable juices that are listed in items 10, 11 and 12 of Schedule 2 are GST-free. Item 10 of Schedule 2 (item 10) provides that certain concentrates for making beverages can be supplied GST-free if they are for making non-alcoholic beverages. These concentrates must consist of at least 90% by volume of juices of fruits or vegetables. Item 11 of Schedule 2 (item 11) provides that a carbonated beverage that consists (100%) wholly of fruit or vegetable juices is GST-free. Item 12 of Schedule 12 (item 12) provides that non-alcoholic and non-carbonated beverages is also GST-free if it contains at least 90% of juices of fruits or vegetables by volume.
Item 13 of Schedule 2 (item 13) provides that beverages and ingredients for beverages of a kind marketed principally as food for infants or invalids can also be supplied GST-free.
Fruit juice
The fruit juice contains less than 90% of juices of fruits and has been marketed as a beverage for school children. Therefore the fruit juice is not a beverage listed under items 10, 11 and 12. The fruit juice contains less than 90% juices of fruits.
However, item 13 provides that a beverage can be supplied GST free if they are marketed principally as food for infants or invalids. Therefore, we have to consider whether the fruit juice is marketed principally as a beverage for infants.
Item 13
Item 13 has been considered in the Federal Court case, Cascade Brewery Co Pty Ltd v. Federal Commissioner of Taxation [2006] FCA 821; (Cascade). In the Cascade case, his Honour Sundberg J considered the meaning of "infants" in item 13 and stated as follows:
34. In my view "infants" in item 13 bears the primary meaning given by the dictionaries referred to: "a child during the earliest period of its life"; "a child during the earliest period of life ...; now most usually applied to a child in arms, a babe"; "a child in the first period of life". The Macquarie meaning is to the same effect as the primary meaning given by the Oxford Dictionary:
"1. a child during the earliest period of its life, or a baby."
In Macquarie, the extended meanings, as in 'infants' school', do not appear as part of the definition of "infant". Those expressions are defined in their own right.
The meaning of "infant school" is outlined in the Macquarie Dictionary as:
"a school, or classes attached to a primary school, for children from about five to eight years of age. Also, 'infant school'."
Therefore the meaning of "infant" in item 13 refers to a child during its earliest period of its life. This will include a child in arms, a babe but does not include school children.
The fruit juice are supplied (marketed principally) to school children. However the term "infant" in item 13 does not include school children. Therefore, the fruit juice is not marketed principally as a beverage for infants. The fruit juice is not a beverage listed in item 13.
As the fruit juice is not a beverage listed in Schedule 2, it is excluded from being GST free by paragraph 38-3(1)(d) of the GST Act.
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