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Ruling

Subject: GST and speciality product

The supply of your product is GST-free.

Question 1

Is the supply of your product subject to (goods and services tax) GST?

Answer

No.

Question 2

Is the importation of your product subject to GST?

Answer

No.

This ruling applies for the following periods:

N/A.

The scheme commences on:

N/A.

Relevant facts and circumstances

You are a company registered for GST

You are planning to import a product into Australia for both domestic and export purposes both in retail and wholesale.

You advise that your product is 100% natural food for human consumption.

Your product is very coarse, hard, opaque white, and does not melt at temperatures typically used for baking.

Your product usually is made by crushing blocks of the natural product, then sifting to obtain fragments of a given diameter. Your product may also be made in an extrusion process.

Your product is used to cover the tops of cooking items such as any type of sweet bread or pastry; it is also used in baked goods.

Your product is not sold or marketed as a cake decoration that is edible or as a confectionary.

Relevant legislative provisions

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

Section 38-2.

Section 38-3.

Section 38-4.

Section 13-10.

Section 23-5.

Section 188-1.

Section 9-25.

Reasons for decision

A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). For the purposes of the GST Act, food is defined under section 38-4 of that Act as any of these or a combination of any of these:

· food for human consumption (whether or not requiring processing or treatment)

· ingredients for food for human consumption

· beverages for human consumption

· ingredients for beverages for human consumption

· goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings), or

· fats and oils marketed for culinary purposes

· but does not include:

· live animals (other than crustaceans or molluscs)

· unprocessed cows milk

· any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition, or

· plants under cultivation that can be consumed (without being subject to further process or treatment) as food for human consumption.

Section 38-3 of the GST Act, also excludes from being GST-free:

· food for consumption on the premises from which it is supplied

· hot food for consumption away from those premises

food of a kind specified in the table in clause 1 of Schedule 1 to 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

· a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2, or

· food of a kind specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

GST-free food

Section 38-2 of the GST Act provides that a supply of food is GST-free. Section 38-4 of the GST Act defines food to include beverages for human consumption and ingredients for beverages for human consumption.

With regard to the importation of your product the definition of food under 38-4 of the GST Act also includes ingredients for food for human consumption and goods to be mixed with or added to food for human consumption (including condiments, spices, seasoning, sweetening agents or flavourings).

However, confectionary, food marketed as confectionary, food marketed as ingredients for confectionary or food consisting principally of confectionary as well as confectionary novelties and edible cake decorations are listed in items 8, 10 and 14 of schedule 1 to the GST Act as food that are not GST-free.

In determining whether food is marketed as a confectionary or ingredients for confectionary the activities of the seller are relevant. Consideration is given to the name of the goods, the price of the goods, the labelling on any containers for the goods, literature or instructions packaged with the goods, how the goods are packaged, how the goods are promoted or advertised and how the goods are distributed.

The main ingredient of your product is not considered to be food marketed as an ingredient for confectionary, although it is an ingredient used in the manufacture of confectionary. The main ingredient of your product has a number of different uses and is used as an ingredient in various foods.

On the facts provided your product is very coarse, hard, opaque white, and does not melt at temperatures typically used for baking. The product usually is made by crushing blocks of a natural product, then sifting to obtain fragments of a given diameter. Your product may also be made in an extrusion process.

Your product is used to cover the tops of cooking items such as any type of sweet bread or pastry; it is also used in baked goods

Your product is not sold or marketed as a cake decoration that is edible or as a confectionary. On that basis, the importation of your product, is considered to be an ingredient for food for human consumption and will be GST-free.

The facts that you have provided about your product indicate that it is food for human consumption or alternatively an ingredient for food for human consumption in accordance with the ordinary meanings of those phrases.

Further, your product does not fall within any of the exclusions listed above from section 38-3 of the GST Act, and therefore, any supply you might make of the speciality product would be GST-free.

This means that you would not be required to remit GST to the Tax Office in relation to a supply of your product.

Issue 1

Question 2

Summary

The importation of speciality product is a non-taxable importation and not subject to GST.

Detailed reasoning

GST is payable on taxable importations. Section 13-5 of the GST Act provides that an importation is a taxable importation if two requirements are met:

· the goods are imported, and

· the entry of the goods is for home consumption.

However, the importation is not a taxable importation to the extent that it is a non-taxable importation.

The term 'home consumption' has the meaning within the Custom Act 1901 and in broad terms, means for consumption, use or application in Australia. GST is payable on taxable importations regardless of whether you are registered or required to be registered for GST.

Under section 13-10 of the GST Act, an importation is a non-taxable importation if:

· it is a non-taxable importation under Part 3-2 of the GST Act, or

· a supply of the imported goods would have been a supply that was GST-free or input taxed.

As stated above, the supply of your product is a GST-free supply of food under section 38-2 of the GST Act. As the supply of your product is GST-free, the importation of your product is a non-taxable importation under section 13-10 of the GST Act.

This means that an entity that imports your product into Australia is not liable to remit GST in relation to that import.