Edited version of private ruling

Authorisation Number: 1011579151531

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Ruling

Subject: GST and supply of juice product

Questions

Is your supply of the juice product GST-free?

Is your importation of the juice product a non-taxable importation?

Answers

Yes, your supply of the juice product is GST-free.

Yes, your importation of the juice product is a non-taxable importation.

Relevant facts and circumstances

You are registered for GST.

You will sell a juice product.

You will engage a supplier overseas to make the juice product and you will import it into Australia in a finished form to onsell to customers.

The juice product is made up of at least 90% by volume of juices of fruits or vegetables.

You will supply this product to third parties.

The product will not be supplied to consumers by you for consumption on the premises from which the product is supplied.

The juice product will be promoted as healthy with no medicinal and therapeutic claims on the packaging.

The product is non-alcoholic and non-carbonated.

The juice product can be consumed on its own. There is no need to add water.

There will be no recommended dosage.

There will be nutritional information as part of the labelling requirements.

Detailed reasoning

Question 1

GST-Free Food

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:

· it satisfies the definition of food in section 38-4 of the GST Act, and

· it is not excluded by section 38-3 of the GST Act.

Food is defined in paragraph 38-4(1)(c) of the GST Act to include beverages for human consumption. Beverage is a defined term within the GST Act, however the definition of 'beverage' provided in the GST Act is limited to subsection 38-4(2) of the GST Act which defines 'beverage' to include water.

In order to determine if the juice product is a beverage, it is necessary to consider how the courts have defined 'beverage'.

Lockhart J in Bristol-Myers Co. Pty. Ltd. v. Federal Commissioner of Taxation (1990) 21 ATR 417 describes 'a beverage' as 'a drink of any kind'. Lockhart J goes on to discuss 'a drink' saying that 'drink' when used as a noun is defined in slightly different ways by dictionaries, but in my view it means any liquid which is swallowed to quench thirst or for nourishment.

The Australian Taxation Office (ATO) view is given in Goods and Services Tax Determination GSTD 2002/2 which explains what supplies of fruit and vegetable juices are GST-free. This is accessible from our website at www.ato.gov.au.

Paragraph 7 of GSTD 2002/2 indicates that a liquid providing nourishment will sustain life by assisting in growth or providing energy. Such a nutritional purpose may be contrasted with a medicinal purpose where liquid is consumed for the treatment of disease or has curative or remedial properties.

Based on the information supplied, we consider that the juice product is a liquid that is swallowed for nourishment or to quench the thirst. When you supply the juice product within Australia you market and sell your product as healthy. Furthermore, you make no medicinal or curative claims on either the labelling or promotional material for the product.

Therefore, the juice product that you will import and sell in Australia is a beverage for human consumption, rather than a medicinal preparation and therefore it falls within the definition of food.

However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage is not GST-free unless it is a beverage of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).

Of most relevance to this situation is item 12 of Schedule 2 (Item 12), which provides that non-alcoholic non-carbonated beverages that consist of at least 90% by volume of juices of fruits or vegetables are GST-free.

Based on the information you provided, the juice product is a non-alcoholic, non-carbonated beverage which consists of at least 90% by volume of juices of fruit or vegetables. Therefore it is GST-free under item 12 of Schedule 2.

In addition, the supply of the juice product does not fall within any of the other exclusions in section 38-3 of the GST Act.

Accordingly, the supply of the juice product is GST-free under section 38-2 of the GST Act.

Question 2

Section 13-10 of the GST Act provides that an importation is a non-taxable importation if:

· it is a non-taxable importation under Part 3-2 of the GST Act, or

· it would have been a supply that was GST-free or input taxed if it had been a supply.

Goods and Services Tax Ruling GSTR 2003/15 discusses importation of goods into Australia. This is also accessible from our website at www.ato.gov.au.

Paragraph 252 of GSTR 2003/15 provides that non-taxable importations under section 13-10 of the GST Act include importations of food or beverage items that are GST-free under the GST Act.

As determined in Question 1 above, a supply of the juice product is GST-free and therefore an importation of the juice product is a non-taxable importation under section 13-10 of the GST Act.

As such, you are not liable to pay GST when you import the juice product into Australia.