ATO Interpretative Decision
ATO ID 2001/438 (Withdrawn)
Goods and Services Tax
GST and sugar used in home brewingFOI status: may be released
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The ATO view on this issue is contained in the Food Industry Partnership Issues Register - Issue 24 - ingredients used for home brewing or wine making.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 supplier of home brew products, 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 sugar as an ingredient for making alcoholic home brew?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells sugar as an ingredient for making alcoholic home brew. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of home brew products. The entity sells sugar that is packaged, labelled and sold for use in making alcoholic home brew.
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
Generally, a supply of food is GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.
Food is defined in paragraph 38-4(1)(d) of the GST Act to include ingredients for beverages for human consumption. In this case, sugar is used as an ingredient to make alcoholic home brew. Therefore, it falls within the definition of food as it is an ingredient for a beverage for human consumption.
However, under paragraph 38-3(1)(d) of the GST Act, the supply of an ingredient for a beverage is only GST-free if it is an ingredient of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
Sugar, irrespective of whether it is used for making alcoholic or non-alcoholic beverages, is not of a kind listed in Schedule 2. As such, the sale of sugar that is packaged, labelled and sold for use in making alcoholic home brew is not a GST-free supply under section 38-2 of the GST Act.
The entity is registered for GST and the supply satisfies 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 supply of sugar that is packaged, labelled and sold for use in making alcoholic home brew is a taxable supply under section 9-5 of the GST Act.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
section 38-2
section 38-3
paragraph 38-3(1)(d)
paragraph 38-4(1)(d)
Division 40
Schedule 2 clause 1
ATO ID 2001/439
ATO ID 2001/440
ATO ID 2001/441
ATO ID 2001/442
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
GST beverages
Ingredients for beverages
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 18 July 2001 | Original statement | |
| You are here | 16 September 2005 | Archived |