Edited version of your written advice

Authorisation Number: 1012813661902

Ruling

Subject: Goods and services tax (GST) and sales of fruit juice

Question

Was/is GST payable on your sales of freshly squeezed fruit juices where you serve/d them in a plastic cup, under the circumstances you have set out?

Answer

No. GST is not payable on these sales under the circumstances you have set out.

Relevant facts and circumstances

You are registered for GST.

You ran a cafe which was a double shop. One part was a sit-in area and the other part had two counters accessible by passing trade. One of these counters sold pure (i.e.100%) freshly squeezed fruit juices. If a customer was seated inside and ordered such a juice, it would have been served in a glass.

However, as this café was situated in an area where there are a lot of offices, you also sold a lot of takeaway freshly squeezed fruit juices, most of which would have been taken back to the office and drunk there. These drinks were served in a plastic cup with a lid on it.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

A New Tax System (Goods and Services Tax) Act 1999 section 38-2

A New Tax System (Goods and Services Tax) Act 1999 section 38-3

A New Tax System (Goods and Services Tax) Act 1999 section 38-4

Reasons for decision

Summary

You are making GST-free sales of food where you sell the freshly squeezed fruit juices and you serve them in a plastic cup, under the circumstances you have set out.

Detailed reasoning

GST is payable on taxable supplies.

You make a taxable supply if you meet the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:

You make a taxable supply if:

(a) You make the supply for consideration; and

(b) the supply is made in the course or furtherance of an

*enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *registered, or required to be registered.

However, the supply is not a *taxable supply to the extent that it is

*GST-free or *input taxed.

(*Denotes a term that is defined in section 195-1 of the GST Act)

A supply of food is GST-free in accordance with section 38-2 of the GST Act if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in subsection 38-3(1) of the GST Act.

According to paragraph 38-4(1)(c) of the GST Act, the definition of food includes beverages for human consumption. Freshly squeezed fruit juices are beverages for human consumption.

Under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage, or an ingredient for a beverage, other than those specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2), are not GST-free.

Item 12 in the table in clause 1 of Schedule 2 (item 12) is non-alcoholic non-carbonated beverages, if they consist of at least 90% by volume of juices of fruits or vegetables.

Based on the information provided, your freshly squeezed fruit juices are non-alcoholic and non-carbonated and consist of only pure fruit. Therefore, they are covered by item 12. Hence, the exclusion at paragraph 38-3(1)(d) of the GST Act does not apply.

Food that is not GST-free includes food for consumption on the premises from which it is supplied (paragraph 38-3(1)(a) of the GST Act).

Goods and Services Tax Determination GSTD 2000/5 explains when is a supply of food is 'for consumption on the premises from which it is supplied'. Paragraphs 2 and 3 state:

2. You supply food for consumption on the premises from which it is supplied if the food is to be consumed:

a) at the place where the supply takes place - for example, restaurants, cafes, snack bars, hotels, motels, bed and breakfasts, clubs, reception lounges, aircraft, boats, trains, venues for catered functions or university dining halls;

b) in grounds surrounding the food supply outlet - for example, at tables on a footpath or in a food court;

c) at any venue with defined limits or boundaries associated with leisure, sport or entertainment - for example, football grounds, gardens (that are on private property or have restricted access), showgrounds, amusement parks, racecourses, zoos or concert halls.

3. However, some suppliers will provide food for consumption both on the premises (dine-in) and away from the premises (takeaway). If you supply food that would otherwise be GST-free to both dine-in and takeaway customers, you need to identify food supplied for consumption on the premises from that which is to be consumed elsewhere. If your business operations identify takeaway supplies from dine-in supplies, the takeaway food is not supplied for consumption on the premises. You will be able to identify takeaway food from dine-in food if you:

• have separate ordering and/or serving processes for dine-in and takeaway customers (for example, dine-in customers may order and receive their meals at their tables or food could be served on a plate or on a returnable tray);

• provide different packaging for dine-in and takeaway food (for example, dine-in customers may receive their water or fruit juice in a glass rather than in a sealed disposable container); or

• have different menus or product lines for dine-in and takeaway customers.

Therefore, if a supply of GST-free food is reasonably anticipated to be consumed away from the premises, it remains GST-free. However, if the food is served in circumstances indicating that consumption will take place on the premises from which it is supplied (for example, a customer receives their meal at a dining table) it is subject to GST.

You use a different type of container for freshly squeezed fruit juice drinks that are to be taken away than you use for freshly squeezed fruit juice drinks that are to be consumed at your premises. If a customer was seated and ordered such a drink, it would be served in a glass. Freshly squeezed fruit juice drinks to be taken away are served in a plastic cup with a lid on it.

Therefore, you can distinguish between freshly squeezed fruit juice drinks to be consumed on your premises and freshly squeezed fruit juice drinks to be taken away. Hence, your supplies of freshly squeezed fruit juice drinks that are served in a plastic cup are not considered to be supplies of food for consumption on the premises from which they are supplied, under the circumstances you have set out. Therefore, the exclusion at paragraph 38-3(1)(a) of the GST Act does not apply under such circumstances. None of the other exclusions in subsection 38-3(1) of the GST Act apply where you serve these drinks in a plastic cup under the circumstances you have set out.

Hence, your sales of freshly squeezed fruit juices are GST-free where you sell them in a plastic cup, under the circumstances you have set out. Therefore, GST is not payable under these circumstances.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).