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Edited version of your written advice

Authorisation Number: 1051333945966

Date of advice: 6 February 2018

Subject: GST classification of food

Ruling

Question 1

Is the supply of raw (unpasteurised) cream to food manufacturers for use in the manufacture of food for human consumption a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

Yes.

Question 2

Is the supply of raw (unpasteurised) cream for use as stock feed a taxable supply under section 9-5 of the GST Act?

Answer 2

Yes.

Relevant facts and circumstances

You supply raw cream and are registered for GST.

Following are the facts as outlined in your letter:

Relevant legislative provisions

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

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

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

A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(a).

A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(b).

Reasons for decision

Summary

Detailed reasoning

The supply of the raw cream is a taxable supply if the requirements of section 9-5 of the GST Act are satisfied.

Section 9-5 of the GST Act states:

(* denotes a term defined in section 195-1 of the GST Act.)

In this case, the supply of the raw cream satisfies the requirements of paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act because:

The supply of the raw cream is not input taxed. It remains to be determined if the supply of the raw cream is GST-free.

A supply is GST-free it is GST-free under Division 38 of the GST Act or under a provision of another Act.

Of relevance is section 38-2 of the GST Act which provides that a supply of food is GST-free 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.

Food is defined in section 38-4 of the GST Act to include food for human consumption whether or not requiring processing or treatment (paragraph 38-4(1)(a) of the GST Act).

Paragraph 1.13 of the Further Supplementary Explanatory Memorandum A New Tax System (Goods and Services Tax) Bill 1999 (EM) provides that food does not include food that is marketed for animals (eg. pet food, bird seed and food for livestock) as it is not food for human consumption.

Paragraph 1.14 of the EM states that food that is unfit for human consumption is not considered food for human consumption under this definition (for example, rotten meat or vegetables).

The term 'legal supply' has no application to the GST legislation (subsection 9-10(3) of the Act). For example, the food regulations per se have no standing in relation to the tax liability of a good, and a broad interpretation of the term 'food for human consumption' is to be applied.

Furthermore, there is no requirement for the supplier to ascertain how the purchaser will use the product. The GST status of the product depends on whether it is a supply of food for human consumption as defined in the GST Act, at the time of your supply.


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