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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1013053018206

Date of advice: 14 July 2016

Ruling

Subject: Raw cow's milk

Question 1

Is your supply of raw milk to a milk processor a GST-free supply?

Answer

No

Question 2

Is the supply of raw milk which has been processed using high pressure or cold pressed processing techniques a GST-free supply

Answer

Please refer to the Reasons for decision

Relevant facts and circumstances

You are registered for GST.

You purchase raw cow's milk from dairy farmers.

You place the raw cow's milk into bottles.

These bottles are then sealed and capped before being placed into a crate and then packaged onto a pallet ready for dispatch.

These bottles are clearly marked as a raw product not fit for human consumption as per the relevant states food authority.

Transfer of ownership and responsibility, including liability, is passed on to a milk processor at dispatch.

The milk is then transported to a milk processor to be pasteurised under high pressure.

Relevant legislative provisions

Section 38-4 of the A New Tax System (Goods and Services Tax) Act 1999

Section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision

Summary

Your supply of raw milk is not GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

A supply of a product 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. Paragraph 38-4(1)(ga) of the GST Act specifically excludes unprocessed cow's milk from the definition of food.

Issue 2 of the Food Industry Partnership - issues register states the following:

Based on the information you provided, you are not processing the raw cow's milk, rather you are only bottling the raw milk and supplying this to a milk processor. As such, your supply of unprocessed cow's milk does not meet the definition of food under section 38-4 of the GST Act.

Your supply of raw milk is therefore not GST-free under section 38-2 of the GST Act. This supply is a taxable supply.

General Guidance

Supply of processed raw cow's milk

The following is provided as general guidance only. As per Issue 2 of the Food Industry Partnership - issues register, the supply of cow's milk which has been subject to any process, other than filtering, will meet the definition of food under section 38-4 of the GST Act. The supply of cow's milk will be a GST-free supply under section 38-2 of the GST Act once the processing has taken place.

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