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Ruling
Subject: GST and food product
Question
Will your supply of the food product (Product) be GST-free?
Answer
Yes.
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You import and then supply the Product.
The Product is fit for human consumption.
The Product is not differentiated at importation with respect to its use, that is, the packaging does not indicate how the Product should be used or sold.
The Product will be sold unaltered, as an ingredient or condiment for food for human consumption.
The Product is added to noodle dishes or soups to enhance the flavour.
The Product is not eaten as a savoury snack.
The Product specifications state that it is oil fried.
The product is packaged in one kilogram retorted bags
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
Section 13-10
Section 38-2
Section 38-3
Section 38-4
Reasons for decision
The only provision in the 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 include amongst other things:
o food for human consumption (whether or not requiring processing or treatment);
o ingredients for food for human consumption; and
o goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings).
In your case the Product is fit for human consumption and will be sold, unaltered, as a condiment or flavouring for food for human consumption. Hence, the Product is a food, the supply of which can be treated as being GST-free, provided it is not exempted under section 38-3 of the GST Act.
Exempted food items
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 the following food items that may be of relevance when considering the GST treatment of your supply:
o potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips (Item 15 of Schedule 1).
In this case, we consider that the Product does not come under Item 15 of Schedule 1. The Product although fried, is not differentiated at importation with respect to its use and is not marketed or imported as a savoury snack. You will sell the Product as a condiment, flavouring or ingredient for food.
Given these circumstances, we consider that the Product is not exempted from being a condiment, flavouring or 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. Hence the supply of the Product will 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:
o it is a non-taxable importation under Part 3-2 of the GST Act, or
o 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 will be GST-free and consequently, your importation will be non-taxable under section 13-10 of the GST Act.