Edited version of private advice

Authorisation Number: 1052096701889

Date of advice: 30 March 2023

Ruling

Subject: GST and preserved fruit

Question 1

Is your supply of the Product a GST-free supply under section 38-2 of the A New Tax System (Goods and Service Tax) Act 1999 (GST Act)?

Answer

Yes.

Question 2

Is your importation of the Product a non-taxable importation under paragraph 13-10(b) of the GST Act?

Answer

Yes.

Relevant facts and circumstances

The entity is a wholesaler who imports preserved fruits and sells them to retail shops, supermarkets and convenience stores.

The Product is made from fruits that are cured in salt and sugar and sun-dried.

The Product is commercially packaged food which is store ready.

The Product is packaged in small bags. It is also imported in bulk cartons. Each carton contains a number of bags of a specified weight.

The Product is consumed straight from the package. No further preparation is required.

The ingredients include fruits salt sugar colour and flavour enhancer.

The Product is prepared as follows:

1.    Clean fresh fruits with water

2.    Mix with salt in container

3.    Store for a number of days

4.    Drain and add water to dissolve salt

5.    Add sugar and other ingredients and sun dry

6.    Weigh and pack based on packing order

7.    Store

Based on the samples provided, the Product is dried preserved fruit that has a salty taste. It does not have the appearance of a crystallised fruit or glace fruit; rather, it appears to have been dusted with powdered food colour. Although the Product is sun dried, it does not have a crunchy or crispy texture. The flesh of the dried fruit is chewy.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-10(b)

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 decisions

Question 1

Is your supply the Product a GST-free supply under section 38-2 of the GST Act?

Summary

Your supply of the Product is GST-free under section 38-2 of the GST Act. The Product is food for human consumption that is not excluded from being GST-free by section 38-3 of the GST Act.

Detailed reasoning

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 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].

However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).

The phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The online Macquarie Dictionary (viewed 24 March 2023) does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean:

'1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4...'

Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question.

In addition, Lansell 2011 at [30] relevantly provides:

The use of the words "of a kind" in s38-3(1)(c) of the GST Act adds further generality to the description of the items described in Schedule 1: Air International Pty Ltd v Chief Executive Officer of Customs (2002) 121 FCR 149 per Hill J. Thus, a new product that does not possess all of the same characteristics of known crackers may nevertheless be within the relevant item...

Application to the Product

The Product satisfies the definition of food under paragraph 38-4(1)(a) of the GST Act; that is, the Product is food for human consumption. As such, the supply of the Product is GST-free unless it is food of a kind specified in Schedule 1.

The Product is not specified in Schedule 1; therefore, it must be determined if the Product is food of a kind specified in the third column of the table.

Item 8 in Schedule 1 (item 8) specifies confectionery, food marketed as confectionery, or food consisting principally of confectionery.

Confectionery are primarily small articles of a sweet character containing substantial amounts of sugar and regarded as being in the nature of a delicacy in whatever quantity they may be consumed.

The Product is dried preserved fruit which has a salty taste. The Product does not have the characteristics of a confectionery. Furthermore, the Product does not consist principally of confectionery and is not marketed as confectionery. We consider that item 8 does not apply.

Item 12 in Schedule 1 (item 12) specifies crystallised fruit, glace fruit and drained fruit.

While the Product is cured in salt and sugar it does not have the appearance of crystallised fruit or glace fruit. The Product is covered with what appears to be powdered food colouring. We do not consider the Product to be covered by item 12.

Item 15in Schedule 1specifies potato crisps, sticks or straws, corncrisps or chips, bacon or pork crackling or prawn chips, while item 18includes food similar to that covered by item 15, whether or not the food consists wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not the food is artificially flavoured.

All of the foods listed in item 15 are generally cooked and have a crispy texture. The Product is made from fruits cured in salt and sugar and although sun-dried, is not similar in appearance or composition to a crisp, stick, straw or chip. The flesh of the fruit has a chewy texture. Item 18 does not apply to the Product because it is not considered to be food similar to that covered by item 15.

The Product is not food of a kind specified in Schedule 1. Furthermore, the supply of the Product does not fall within any other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Product is GST-free under section 38-2 of the GST Act.

Question 2

Is your importation of the Product a non-taxable importation under paragraph 13-10(b) of the GST Act?

Summary

Your importation of the Product is a non-taxable importation under paragraph 13-10(b) of the GST Act as had it been a supply it would have been GST-free, as outlined in Question 1.

Detailed reasoning

Paragraph 13-10(b) of the GST Act provides that an importation is a non-taxable importation if it would have been a supply that was GST-free or input taxed if it had been a supply.

As discussed in our response to Question 1 above, your supply of the Product is GST-free under section 38-2 of the GST Act. Therefore, had the importation of the Product been a supply, it would be GST-free. Accordingly, your importation of the Product is a non-taxable importation.

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