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Ruling
Subject: blanched nuts
Question
Is the supply of blanched peanuts GST-free?
Answer
Yes.
Relevant facts
You are registered for the goods and services tax (GST).
You carry on the enterprise of supplying blanched peanuts.
The blanched peanuts are raw peanuts without the shells.
The peanuts are heated sufficiently to remove the skin but the peanuts remains raw.
The blanched peanuts are supplied to food manufacturers for the preparation of food products such as snack nuts. The food manufacturer roasts the peanuts such that the colour of the peanuts darkens and the peanuts are cooked.
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 (paragraph 38-4(1)(a) of the GST Act. The blanched peanuts are raw de-shelled peanuts which are sold to food manufacturers for the production of food such as peanut butter, snack bars or savoury nuts. The blanched peanuts satisfy the definition of food in section 38-4 of the GST Act as they are food 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. Therefore we need to consider whether the blanched peanuts are food of a kind specified in Schedule 1.
Food of a kind specified in Schedule 1
The GST status of peanuts is outlined in the Australian Taxation Office (ATO) public ruling "Detailed Food List" (Food lists). The details are as follows:
Items |
GST status |
Notes |
peanuts (blanched, raw) |
GST-free |
Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. |
peanuts (salted, spiced, smoked, roasted, seasoned or otherwise flavoured) |
Taxable |
Schedule 1, item 16 of the GST Act applies |
wasabi peanuts |
Taxable |
Schedule 1, item 18 of the GST Act applies |
Item 16 of Schedule 1 (Item 16) specifies that seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way are specified as being a food that is not GST-free. This will apply to peanuts which have been salted, spiced, smoked, roasted, seasoned or flavoured so that they fall into the category of savoury snacks.
The blanched peanuts are raw peanuts that have been lightly roasted to remove their skin and to ensure that they can be safely stored
In your circumstances, the peanuts are raw de-shelled peanuts. The blanched peanuts have been heated to loosen and remove the skin. The blanched peanuts remain raw.
You supply the blanched peanuts to food manufacturers for the preparation of food products such salted snack nuts. The food manufacturers process the blanched peanuts by further roasting such that the colour of the peanuts has darkened and are cooked.
Therefore, based on the above information, we considered the blanched peanuts are not considered to be food of a kind specified under item 16. The peanuts are raw and blanched. They are not being excluded from being GST-free by section 38-3 of the GST Act. The blanched peanuts are therefore GST-free under section 38-2 of the GST Act.