ATO Interpretative Decision
ATO ID 2002/878
Goods and Services Tax
GST and supply of used cooking oilFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 used cooking oil, 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 supplies used cooking oil, that has been extracted from cooking vats, to a company that recycles the oil?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies used cooking oil, that has been extracted from cooking vats, to a company that recycles the oil. The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a supplier of used cooking oil. It cleans and filters oil from deep fry cooking vats. The entity supplies the used cooking oil to a company for recycling.
At the time of supply, the used cooking oil is not able to be used in any food application (that is, it cannot be used in food or to cook food).
The entity is registered for goods and services tax (GST) and the supply satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
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:
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- ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act);
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- goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings) (paragraph 38-4(1)(e) of the GST Act);
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- fats and oils marketed for culinary purposes (paragraph 38-4(1)(f) of the GST Act).
The entity supplies used cooking oil, that has been extracted from cooking vats, to a company for recycling. The oil is not able to be used in any food application. Therefore, the used cooking oil is not an ingredient for food for human consumption nor is it goods to be mixed with or added to food for human consumption. In addition, as the oil cannot be used for food and is being sold to an oil recycling company, the used cooking oil is not marketed for culinary purposes.
Therefore, the supply of used cooking oil is not a supply of food for the purposes of section 38-4 of the GST Act. Accordingly, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies used cooking oil that has been extracted from cooking vats, to a company that recycles the oil.
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 any other provision in 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 supplies used cooking oil that has been extracted from cooking vats, to a company that recycles the oil.
Date of decision: 21 February 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 9-5
Division 38
section 38-2
section 38-3
section 38-4(1)(b)
section 38-4(1)(e)
section 38-4(1)(f)
Division 40
Keywords
Goods and services tax
GST free
GST food
Ingredients for food
GST supplies & acquisitions
Taxable supply
ISSN: 1445-2782