ATO Interpretative Decision
ATO ID 2001/468 (Withdrawn)
Goods and Services Tax
GST and coffee whitenerFOI status: may be released
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This ATO ID is withdrawn as the Tax Office position on this issue is contained in the current GST Food Guide (NAT 3338)This document incorporates revisions made since original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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 coffee whitener?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells coffee whitener. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. The entity sells coffee whitener.
Coffee whitener is in a powdered form. Coffee whitener is an additive to coffee and is used as a non-dairy substitute for milk.
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 the supply does not come within any of the exclusions listed in section 38-3 of the GST Act.
The term 'food' is defined in section 38-4 of the GST Act to include: beverages for human consumption (paragraph 38-4(1)(c) of the GST Act) or ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act).
Coffee whitener is used as an additive to coffee and is not a beverage in its own right. Therefore, the supply of coffee whitener does not satisfy paragraph 38-4(1)(c) of the GST Act. Coffee whitener is used as a non-dairy substitute for milk in coffee. Therefore, It is an ingredient for a beverage, and therefore, satisfies the definition of food in paragraph 38-4(1)(d) of the GST Act.
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 a supply of an ingredient of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
The items of relevance in this case are item 1, item 7 and item 8 of Schedule 2.
Item 1 of Schedule 2 provides that any of the following products are GST-free - milk, skim milk or buttermilk (whether liquid, powdered, concentrated or condensed), casein, whey, whey powder or whey paste. However, coffee whitener is a non-dairy substitute for milk and therefore, does not fall within item 1 of Schedule 2.
Item 7 of Schedule 2 provides that preparations for drinking purposes that are marketed principally as tea preparations, coffee preparations, or preparations for malted beverages are GST-free. However, coffee whitener on its own is not a preparation for drinking purposes that is marketed principally as a coffee preparation. Therefore, coffee whitener does not fall within item 7 of Schedule 2.
Item 8 of Schedule 2 provides that preparations marketed principally as substitutes for preparations covered by item 6 or 7 of Schedule 2 are GST-free. However, coffee whitener is not a preparation marketed principally as a substitute for a coffee preparation. Coffee whitener is a non-dairy substitute for milk. Therefore, coffee whitener does not fall within item 8 of Schedule 2.
Consequently, coffee whitener is not an ingredient for a beverage of a kind specified in Schedule 2. Therefore, coffee whitener is not GST-free under section 38-2 of the GST Act.
The entity is registered for GST and the supply of coffee whitener satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply of coffee whitener 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 coffee whitener.
Date of decision: 15 August 2001
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)
section 38-4
paragraph 38-4(1)(c)
paragraph 38-4(1)(d)
Division 40
Schedule 2 clause 1
Schedule 2 clause 1 table item 1
Schedule 2 clause 1 table item 6
Schedule 2 clause 1 table item 7
Schedule 2 clause 1 table item 8
Keywords
Goods and services tax
GST food
GST beverages
Ingredients for beverages
Taxable supply
ISSN: 1445-2782
| Date: | Version: | |
| 15 August 2001 | Original statement | |
| You are here | 5 December 2008 | Archived |