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Ruling

Subject: GST and food

Question

Is your supply of a particular food product (Product) subject to goods and services tax (GST)?

Answer

No. Your supply of the Product is GST-free as an ingredient for food for human consumption.

Your importation of the Product is also non-taxable as a consequence.

Relevant facts and circumstances

You are registered for GST.

You import and then supply unaltered the Product.

The Product is fit for human consumption.

The Product is marketed and sold as a food flavouring and sweetening agent to manufacturers of cakes, desserts and similar food products.

The Product is not a confectionery product or is it specifically marketed as an ingredient for confectionery products.

An analytic analysis of the product shows that it has measurable nutritional value in the form of sugars, proteins, carbohydrates, fats and various vitamins.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999:

Section 13-10

Section 38-2

Section 38-3

Section 38-4

Reasons for decision

The only provision in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) that may allow your supply of the Product to be GST-free is as a supply of food which is GST-free under section 38-2 of the GST Act. The food, however, must not come within any of the exclusions listed in section 38-3 of the GST Act.

Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of the foods defined in this provision, the most relevant to your circumstances is paragraph 38-4(1)(b) which provides for ingredients for food for human consumption and paragraph 38-4(1)(e) which provides for sweetening agents and flavourings for food for human consumption.

Note that some of the products that fall within paragraph 38-4(1)(e) of the GST Act can also fall within the meaning of an ingredient for food for human consumption under certain circumstances. Given the high nutritional value of the Product and the importance of this type of product for foods requiring sweetening (for example, cakes and desserts that normally require high sugar content), we consider that on balance the Product also falls into the category as an ingredient for food for human consumption.

In your case, the Product is fit for human consumption and will be sold, unaltered, as an ingredient for cakes, desserts and other similar products. Hence, the Product is a food, the supply of which can be treated as being GST-free, provided it is not excluded from being GST-free under section 38-3 of the GST Act.

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.

Schedule 1 includes at Item 8 the following food items that are of relevance when considering the GST treatment of your supply given that some similar products are used to make confectionery:

· confectionery, food marketed as confectionery, food marketed as ingredients for confectionery or food consisting principally of confectionery.

In this case, we consider that the Product does not come under Item 8 of Schedule 1 as it is not specifically marketed and sold as confectionery or as an ingredient for confectionery.

Given these circumstances, we consider that the Product is not excluded from being an ingredient for food for human consumption under 38-3 of the GST Act and consequently, it is a food as defined by subsection 38-4(1) of the GST Act. Consequently, its supply would be GST-free.

Non taxable importation

Please note that 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 (for example, it would be a GST-free supply had the supply been made in Australia).

In your case, your supply of the Product in Australia is GST-free and consequently, your importation of the Product is non-taxable under section 13-10 of the GST Act.