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Ruling
Subject: Food Combination
Question
1. Is the supply of the following products GST-free?
o Product A
o Product B
Decisions
o No
o Yes
Relevant facts:
You are registered for goods and services (GST).
You supply product A.
You also product B.
The products are designed for the consumer to mix the foods in the container before consumption and are not beverages.
Reasons for decisions
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 (paragraph 38-4(1)(a) of the GST Act). In this case the food combination products are food for human consumption as they satisfy the definition of food in section 38-4 of the GST Act. The products consists are for human consumption.
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), or food that is a combination of one or more foods, at least one of which is food of such a kind specified in Schedule 1. As you have advised that the products are not a beverage, we do not have to consider Schedule 2 of the GST Act, which is about beverages.
Food of such a kind specified in Schedule 1
To determine the GST status of the products we need to determine the GST status of the individual food components in the food combination products.
Combination of food in the products
As there are more than one food supplied in combination in the products, we need to consider the application of paragraph 38-3(1)(c) of the GST Act.
The paragraph states:
food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or
Where the supply is a combination of foods, the supply will be taxable under paragraph 38-3(1)(c ) of the GST Act if at least one of the foods in the combination is listed in Schedule 1. However, where all the foods in the combination are not foods of a kind specified in Schedule 1, the supply of the combination of foods is GST-free under section 38-2 of the GST Act.
Based on the information provided, we consider paragraph 38-3(1)(c) of the GST Act applies to product A.
However, paragraph 38-3(1)(c) of the GST Act does not apply to product B. Therefore, the supply of product B is GST-free food under section 38-2 of the GST Act.