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Edited version of your written advice
Authorisation Number: 1012830911632
Date of advice: 26 June 2015
Ruling
Subject: Goods and services tax (GST) and the supply of product
Issue
Is the supply of a food product by the food supplier (you) GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, your supply of the food product is GST-free under section 38-2 of the GST Act.
Relevant facts
• You are an Australian entity that is registered for GST.
• You are distributor of the product in Australia.
• You import and supply the product mainly through retail outlets.
• The food product is made wholly from specific bran.
• The product has a mild flavour of oats. The consumers are advised to eat it by mixing it with their smoothies, fruit juice or breakfast cereals.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 13-10
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
A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-4(1)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause 1
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 its supply is not excluded from being GST-free by section 38-3 of the GST Act.
'Food' is defined in section 38-4 of the Act to include:
(a) food for human consumption (whether or not requiring further processing or treatment);
(b) ingredients for food for human consumption;
(c) *beverages for human consumption;
(d) ingredients for beverages for human consumption;
(e) 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)
Furthermore, 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.
Based on the information provided, the product can be added to smoothies, fruit juice or breakfast cereals. The product is marketed as food for humans and sold in retail pharmacies. Hence, the product is considered 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.
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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). The product is not food of a kind specified in Schedule 1.
Taking all factors into consideration, the product is not considered to be food of a kind specified in the table in clause 1 of Schedule 1 and does not fall within any of the other exclusions in section 38-3 of the GST Act.
Accordingly, as the product satisfies the definition of food and is not excluded from being GST-free, your supply of product will be a GST-free supply of food under section 38-2 of the GST Act.
Your importation of the product will be also non-taxable as a consequence
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