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Edited version of private ruling
Authorisation Number: 1011473525108
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Ruling
Subject: GST and Aspartame
Question
Is the sale of Aspartame to manufacturers of dry beverages subject to GST?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You import Aspartame in 25kg drums and sell it to manufacturers of dry beverages.
You do not add anything to, or alter the Aspartame in any way.
The specification sheet that you have provided for Aspartame states it is a low-calorie intensive sweetener. It is chemically pure and contains no additives, preservatives, or colours. It is widely used in food products such as beverages, jams, instant coffee, frozen milk products, chewing gum and salad dressings.
You have stated that Aspartame consists of the natural amino acids L-aspartic acid and L-phenylalanine and that it has a caloric value of 17 kilojoules per gram.
Reasons for decision
Summary
The sale of Aspartame to manufacturers of dry beverages is not subject to GST.
Detailed reasoning
A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (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 subsection 38-4(1) of the GST Act to include ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act), ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act) and 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).
In your case, Aspartame is a sweetening agent that you sell to manufacturers who add it to dry beverages for human consumption. Food Standards Australia New Zealand (FSANZ) defines Aspartame as an additive with its additive number being 951. Aspartame therefore satisfies the definition of food under paragraph 38-4(1)(e) of the GST Act as being a good to be mixed with or added to food for human consumption.
However, under paragraph 38-3(1)(e) of the GST Act, a supply is not GST-free under section 38-2 of the GST Act if it is a supply of 'food of a kind specified in regulations made for the purposes of this subsection'.
Regulation 38-3.02 of the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) determines that food additives are not GST-free unless they are exempt food additives.
Under paragraph 38-3.02(2)(a) of the GST Regulations, a food additive which, at the time of supply, is packaged and marketed for retail sale is an exempt food additive. However, you do not package or market Aspartame for retail sale at the time of supply. Therefore, Aspartame is not an exempt food additive under paragraph 38-3.02(2)(a) of the GST Regulations.
To be considered an exempt food additive under paragraph 38-3.02(2)(b) of the GST Regulations, the additive must:
have a measurable nutritional value
be used solely or predominantly in the composition of food, and
be essential to the composition of that food.
Measurable nutritional value
Although the term 'measurable nutritional value' is used in the GST Regulations, it is not defined in the GST Act. The Tax Office will accept that a product has a measurable nutritional value for the purposes of the GST Regulations where the nutritional information is prepared in accordance with the Food Standards Code published by the FSANZ, and that the information contains any measured values of nutrition (such as sugars, protein, fat or carbohydrates).
The FSANZ have approved the use of Aspartame as an additive in foods (additive number 951). The specification sheet that you have provided indicates that the product is Aspartame with no other additives and states that it is a low-calorie intensive sweetener. Furthermore, you state that it has a caloric value of 17 kilojoules per gram, which for our purposes, is a measured value of nutrition.
Used solely or predominantly in the composition of food
The specification sheet states that Aspartame is a sweetener suitable for a variety of food products and you supply it solely for use in the manufacture of food.
Essential to the composition of that food
For the purposes of the GST Regulations, it is accepted that a product is 'essential' to an item of food if it is manufactured for use in food.
Therefore Aspartame is an exempt food additive under paragraph 38-3.02(2)(b) of the GST Regulations and is not food of a kind specified for the purposes of paragraph 38-3(1)(e) of the GST Act
In addition, the supply of Aspartame does not fall within any of the other exclusions in section 38-3 of the GST Act.
Therefore, the supply of Aspartame is a GST-free supply under section 38-2 of the GST Act.