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ATO Interpretative Decision

ATO ID 2001/449 (Withdrawn)

Goods and Services Tax

GST and ingredients used in home brewing
FOI status: may be released
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 GST-free supplies under section 38-2 of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act), when it sells:

•
calcium carbonate;
•
potassium sorbate;
•
licorice extract;
•
yeast;
•
grains;
•
sodium metabisulphite;
•
ascorbic acid;
•
citric acid;
•
malic acid;
•
martaric acid;
•
tartric acid
•
beer finings; and
•
hops,

as ingredients for making alcoholic home brew?

Decision

No, the entity is not making GST-free supplies under section 38-2 of the GST Act when it sells:

•
calcium carbonate;
•
potassium sorbate;
•
licorice extract;
•
yeast;
•
grains;
•
sodium metabisulphite;
•
ascorbic acid;
•
citric acid;
•
malic acid;
•
martaric acid;
•
tartric acid
•
beer finings; and
•
hops,

as ingredients for making alcoholic home brew. The entity is making taxable supplies under section 9-5 of the GST Act.

Facts

The entity is a supplier of home brew products. The entity sells calcium corbonate; potassium sorbate; licorice extract; yeast; grains; sodium metabisulphite; ascorbic acid; citric acid; malic acid; tartaric acid; beer finings and hops that are packaged, labelled and sold for use in making alcoholic home brew.

The entity is registered for goods and services tax (GST). The supplies meet 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, calcium carbonate; potassium sorbate; licorice extract; yeast; grains; sodium metabisulphite; ascorbic acid; citric acid; malic acid; martaric acid; beer finings; and hops are used as ingredients to make alcoholic home brew. Therefore, they fall within the definition of food as they are ingredients 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 for human consumption 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).

When an entity sells calcium carbonate; potassium sorbate; licorice extract; yeast; grains; sodium metabisulphite; ascorbic acid; citric acid; malic acid; martaric acid; tartric acid; beer finings and hops regardless of whether they are used for making alcoholic or non-alcoholic beverages, the ingredients are not of a kind specified in Schedule 2.

Accordingly, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies these ingredients.

The entity is registered for GST and the supply meets the other positive limbs of section 9-5 of the GST Act. Furthermore, the supplies are 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 taxable supplies under section 9-5 of the GST Act when it sells calcium carbonate; potassium sorbate; licorice extract; yeast; grains; sodium metabisulphite; ascorbic acid; citric acid; malic acid; martaric acid; tartric acid; beer finings and hops that are packaged, labelled and sold for use in making alcoholic home brew.

Date of decision:  11 September 2001

Legislative References:
A New Tax System (Goods & 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

Related ATO Interpretative Decisions
ATO ID 2001/438 ATO ID 2001/439 ATO ID 2001/440 ATO ID 2001/441 ATO ID 2001/442 ATO ID 2001/450

Other References:
Food Industry Issues Register - Issue 24

Keywords
Goods & services tax
GST free
GST food
Food for human consumption
GST beverages
Ingredients for beverages
Taxable supply

Business Line:  GST

Date of publication:  11 October 2001

ISSN: 1445-2782

history
  Date: Version:
  11 September 2001 Original statement
You are here 23 September 2005 Archived

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