Edited version of private ruling

Authorisation Number: 1011607488910

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and the supply of quinoa products

1. Is the supply of the quinoa product GST-free as it is covered by section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Yes, the supply of the quinoa product is GST-free under section 38-2 of the GST Act.

2. Is the supply of the quinoa flakes product GST-free as it is covered by section 38-2 of the GST Act?

Yes, the supply of the quinoa flakes product is GST-free under section 38-2 of the GST Act.

Relevant facts and circumstances

The entity is registered for the goods and services tax (GST).

The two products in question are the white quinoa and quinoa Flakes.

Quinoa is a grain like product that originated in South America. Quinoa was of great nutritional importance in pre-Columbian Andean civilizations, being secondary only to the potato, and was followed in importance by maize.

In contemporary times, this crop has become highly appreciated for its nutritional value, as its protein content is very high (12%-18%).

Like oats, quinoa contains a balanced set of essential amino acids for humans, making it an unusually complete protein source among plant foods.

Quinoa is a good source of dietary fibre and phosphorus and is high in magnesium and iron.

It is gluten-free and considered easy to digest.

White Quinoa

The white quinoa product has the appearance of small grains which have a light, fluffy texture when cooked. It is often used as a rice substitute to complement meat/seafood/chicken/bean dishes, for human consumption. It is versatile enough to be substituted for almost any grain.

The product consists of white quinoa grains with no preservatives or additives.

The product has been processed without the use of artificial fertilizers and pesticides.

It is highly nutritious and delicious to taste. It is easy to digest and suitable for vegetarians and vegans given its nutrient-concentrated content.

White quinoa is suitable in soups and stews, as well as cereals, salads, stuffings, burgers, paellas and stir fries.

The cooking instructions are that the white quinoa takes only minutes to cook; it cooks and serves like rice.

Quinoa flakes

The quinoa flakes product can be substituted for almost any cereal and can be cooked and served with honey, fruit or cinnamon similar to oats, for human consumption. The quinoa flakes can also be used as a grain ingredient for cookies and other baked food products.

The product consists of quinoa flakes with no preservatives or additives.

Quinoa comprises one of the highest protein contents compared to other grains due to its "seed" profile. It is highly nutritious and delicious to taste. It is rich in protein, high in fibre, GM free, low GI, gluten free, and wheat-free. The quinoa flakes are versatile enough to be substituted for almost any grain. It is easy to digest and suitable for vegetarians and vegans given its nutrient-concentrated content.

The product has been processed without the use of artificial fertilizers and pesticides.

The quinoa flakes are in a single package of an equivalent to several servings per package.

The product packaging information suggests that the quinoa flakes can be used as an ingredient in cookies, porridge, breakfast cereals, baked goods, biscuits, muffins, muesli bars, etc.

The quinoa flakes are light and delicious to taste as a hot cereal, which is quick and easy to prepare. Fruit and sweetener can be added for a delicious hot breakfast meal.

The cooking instructions are that the quinoa flakes can be cooked with water using a microwave or cooked by bringing it to boil in water using a saucepan. The quinoa flakes take only a few minutes to cook.

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:

· Food for human consumption (whether or not requiring further processing or treatment)

· Ingredients for food for human consumption

· Beverages for human consumption

· Ingredients for beverages for human consumption

· Goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings)

· Fats and oils marketed for culinary purposes.

Paragraph 38-4(1)(a) of the GST Act provides that food includes food for human consumption (whether or not requiring processing or treatment). You have advised that both the White Quinoa grain and the Quinoa Flakes are food for human consumption and satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-4(1)(h) of the GST Act provides that food does not include 'any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition'.

The word grain is not defined in the GST Act and therefore it takes its ordinary meaning. Although grain most commonly implies the edible seeds of cereals, it can also apply to other hard seeds, such as sunflower seeds, linseed, rapeseed (canola) and dried pulses.

For the purposes of the GST Act, the Australian Taxation Office (ATO) interprets the term 'grain' to include quinoa grain. As quinoa is grain for GST purposes, it is our view that it is not food unless it has been subjected to a treatment or process that has altered its form, nature or condition.

In this case, the White Quinoa product has been processed and takes only minutes to cook. As the White Quinoa product has been processed and it is marketed for human consumption, it has the 'essential character' of 'food' for the purposes of the GST Act.

However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). White Quinoa is not food of a kind specified in Schedule 1, nor is the supply excluded from being GST-free under any other paragraph of section 38-3 of the GST Act. Therefore, the supply of the white quinoa product is GST-free under section 38-2 of the GST Act.

Similarly, the quinoa flakes product is not food of a kind specified in Schedule 1, nor is the supply excluded from being GST-free under any other paragraph of section 38-3 of the GST Act. Therefore, the supply of the quinoa flakes product is GST-free under section 38-2 of the GST Act.