ATO Interpretative Decision
ATO ID 2001/384 (Withdrawn)
Goods and Services Tax
GST and Noni Fruit CapsulesFOI status: may be released
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The ATO view is covered in the 'GST food guide - Part 3 - Detailed food list'.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells noni fruit capsules?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells noni fruit capsules. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. In this case, the entity is selling noni fruit capsules.
The capsules contain 100% sun dried noni fruit (morinda citrifolia).
Section 38-50 of the GST Act does not apply to make a supply of noni fruit capsules GST-free.
The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
Division 38 sets out the supplies that are GST-free. Under section 38-2 of the GST Act a supply of 'food' is GST-free. Subsection 38-4(1) of the GST Act sets out what amounts to food for the purposes of section 38-2 of the GST Act. Of most relevance to this case, is paragraph 38-4(1)(a) of the GST Act which provides that food includes 'food for human consumption (whether or not requiring processing or treatment)'.
As such, the issue at hand is whether the noni fruit capsules are considered to be 'food for human consumption' under paragraph 38-4(1)(a) of the GST Act.
The phrase 'food for human consumption' is not defined for the purposes of paragraph 38-4(1)(a) of the GST Act. As such, the ordinary meaning of the words in the phrase must be examined.
'Food' is defined in The Macquarie Dictionary (1997) as 'what is eaten, or taken into the body, for nourishment'. However, currently there is no Australian case law that discusses the meaning of the word 'food'. Nevertheless, further guidance as to the meaning of the word 'food' can be gained from similar cases decided in overseas jurisdictions.
In Grosvenor Commodities (LON/90/1805X) No 7221, the Chairman stated that '....capsules do not satisfy hunger...they do look like food, taste like food or fill the stomach like food. In my mind the capsules are clearly not food.'
Therefore, it is considered that products sold in capsule form do not look like, taste like or fill the stomach like food. As a result, products sold in capsule form are not considered to be 'food for human consumption' for the purposes of paragraph 38-4(1)(a) of the GST Act.
The product in question is sold in capsule form. As such, the noni fruit capsules are not considered to be food for the purposes of paragraph 38-4(1)(a) of the GST Act. Therefore, as the noni fruit capsules do not amount to food under subsection 38-4(1) of the GST Act, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells the noni fruit capsules.
The entity is registered for GST and the supply meets the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it sells the noni fruit capsules.
Date of decision: 21 December 2000
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
section 38-2
subsection 38-4(1)
paragraph 38-4(1)(a)
section 38-50
Division 40
Case References:
Grosvenor Commodities
(LON/90/1805X) No 7221
Other References:
The Macquarie Dictionary 1997, 3rd edition, The Macquarie Library Pty Ltd, New South Wales
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 21 December 2000 | Original statement | |
| You are here | 30 September 2005 | Archived |