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Ruling
Subject: GST classification - date roll products
Question 1
Are coconut date rolls and almond date rolls GST-free in accordance with Section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes.
Relevant facts and circumstances
You are registered for GST and intend to supply the products in question by retail sale.
The products in question are 100% fruit products that are imported and supplied to you by a fruit and vegetable wholesaler.
You have provided a sample of the products for us to consider in making our decision.
The products consist of chopped, processed or mashed dates that are formed into a short log or roll. They have then been rolled in either coconut or crushed almonds.
They are natural products that do not contain any preservatives or added sugars or flavours. The only ingredients are dates and almonds or dates and coconut.
The products are marketed as a natural fruit snack, and will be sold from the fruit and vegetable department.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Reasons for decision
Summary
A supply of coconut date rolls and almond date rolls are GST-free under section 38-2 of the GST Act. It is a supply of food, and is not excluded from being GST-free by section 38-3 GST Act.
Detailed reasoning
Food is defined in paragraph 38-4(1)(a) of the GST Act to include food for human consumption whether or not it requires processing or treatment. The products you supply are considered to be food under this definition.
Section 38-2 of the GST Act states that a supply of food is GST-free, however under section 38-3 of the Act a supply is not GST free if it is a supply of food of a kind specified in the third column of the table in clause 1 of Schedule 1 (the Schedule) of the GST Act, or food that is a combination of one or more foods at least one of which is food of such a kind. If your food is of a kind specified in Schedule 1 it will not be GST-free.
As detailed in the Schedule, food that is considered to be confectionery will not be GST-free. Therefore it is necessary to consider whether your product is considered to be confectionery within the terms of the Schedule.
Within the confectionery category there are a number of table items that may be relevant to your product. These are item 8 (relevantly confectionery or food marketed as confectionery) and item 11 (food known as muesli bars or health food bars and similar foodstuffs).
Confectionery or food marketed as confectionery
We consider that your food is not intended to be a confectionery item, and is not food marketed as confectionery.
The document Food Industry Partnership - issues register available on the ATO website considers confectionery generally and food marketed as confectionery (at Issue 12).
Confectionery includes items such as chocolate, boiled sweets, lollipops, sherbet, marshmallow and fruit lollies. Confectionery is primarily a small article of a sweet character containing substantial amounts of sugar (per Aickin J, Landau and Anor. v Goldwater and Anor. 13 ALR 192).
Your products are natural products made of dried fruit that has no added sugar, flavour or preservatives. We therefore do not consider that they are confectionery.
We also consider that the other items in the confectionery category are indicative of the types of food that are intended to be excluded from GST-free status. These include items such as crystallised fruit, glace fruit and drained fruit. These can be contrasted to your products in that they involve higher levels of processing, the addition of sugars and syrups, and also concentrating the products. In contrast, your products are natural products that would be expected to have only been subjected to minimal processing.
Furthermore, your products are not marketed as confectionery. The products are labelled and marketed as a natural fruit snack, and they will be sold by you from the fruit and vegetable department packaged in a plastic punnet.
Muesli bars, health food bars, similar foodstuffs
The ATO view on muesli or health bars is provided in GSTD 2008/2. A muesli or health bar is considered to be a commercially-prepared and packaged snack made from a muesli mixture, usually sweetened and set in a bar shape. To be considered a similar foodstuff to these a food must resemble these bars in terms of their physical presentation and ingredients.
Your products only have two ingredients, which is not consistent with health or muesli bars that normally have numerous ingredients and usually include cereals or grains in the body of the product. Your products have the appearance of a dried fruit log and are not individually wrapped. Therefore we do not consider them to be a muesli bar, health food bar or similar foodstuff.
Bakery products - cake or slice
For the sake of completeness, we also do not consider your product to be a bakery product of the nature of a cake or slice.
The Macquarie dictionary (5th edition) considers a cake to mean, amongst other things, 'a sweet baked food in loaf or layer form, made with or without shortening, usually with flour, sugar, eggs, flavouring, usually with baking powder or soda, and a liquid.' A slice is generally considered to be 'any of several cakes or biscuits cooked or formed as a think slab and cut into rectangular pieces.'
As your product consists of chopped and rolled fruits only, and would be expected to have only been subjected to minimal processing, it is not considered to come within the definition of a cake or slice.
Summary
Our view is that your products are not confectionery within the terms of the Schedule, nor are they a bakery product. The products are therefore a supply of food, and food of a kind that is not excluded from being GST-free by section 38-3 GST Act. Therefore the supply of the product will be GST-free.