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Edited version of private ruling
Authorisation Number: 1011706184235
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Ruling
Subject: GST classification of beverages
Question 1
Is the supply of a spelt based drink subject to Goods and Services Tax (GST)?
Answer
No, it is GST-free
Question 2
Is the supply of a barley based drink GST-free?
Answer
Yes.
Question 3
Is the supply of an oat based drink GST-free?
Answer
Yes.
Question 4
Is the supply of an almond based drink GST-free?
Answer
Yes.
Question 5
Is the supply of a rice based drink GST-free?
Answer
Yes.
Facts
You carry on an enterprise and are registered for GST.
You requested a private ruling on the GST classification of a product.
By virtue of the nature of its packaging, the product is a milk alternative.
Reasons for Decision
Section 9-5 of the GST Act provides that you make a taxable supply if:
the supply is for consideration; and
the supply is made in the course or furtherance of an enterprise that you carry on; and
the supply is connected with Australia; and
you are registered for required to be registered
However the supply is not a taxable supply to the extent that it is GST free or input taxed.
Section 38-2 of the GST Act provides that a supply of food is GST-free. The meaning of food is covered by section 38-4 of the GST Act which includes beverages for human consumption.
Beverages that are GST-free are listed in the second column of Schedule 2 of the GST Act. Theses are milk products; soy milk and rice milk; tea, coffee etc; fruit and vegetable juices; beverages for infants or invalids; and water.
Item 1 of Schedule 2 provides that milk products such as skim milk or buttermilk (whether liquid, powdered, concentrated or condensed) are GST-free.
The product container list it to be cholesterol free vegetable drink.
Item 10 of Schedule 2 of the GST Act provides (in part) that non alcoholic carbonated beverages that consist of at least 90% by volume of juices of fruit or vegetables will be GST-free.
While the container list it to be a vegetable drink, it does not consist of at least 90% by volume of juices of fruit/vegetables. As such the supply of the product will not be GST-free under item 10 of Schedule 2.
As consequence we have reviewed the manufacturer's web site for additional information and also compared your product's ingredients to other products marketed as plant based milks.
The manufacturer makes the following remarks on its web site:
In recent years in the organic food market there has been a strong demand for vegetable drinks alternative to milk for all types of uses and consumption. The millet drink aims to meet this need and above all to offer those who appreciate our range of old world cereals a new flavour (bold is our emphasis).
The last sentence of the above quote refers to a range of cereal based drinks that have a "new flavour". It is reasonable to conclude that it is not only the millet based cereal drink that the manufacturer considers to be an alternative to (dairy based) milk but a wider range of their products
Given that the ingredients of the product is similar to existing milks on the market based on the respective plant source, then your supply will be GST-free under Item 1 of Schedule 2 of the GST Act.
It is noted that based on the wording of items 1 and 4 of Schedule 2 of the GST Act, flavoured milk beverages (whether derived from animal or plant sources) are not GST-free.