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Ruling
Subject: Flavoured soy milk
Question
Is the supply of flavoured soy milk GST-free?
Decision
No.
Relevant facts:
You are registered for the goods and services tax (GST).
You request advice on flavoured soy milk.
The soy milk is made from soy bean.
The soy milk contains sugar and flavouring agents.
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) provided that the supply does not come within any of the exclusions listed in section 38-3 of the GST Act.
Food is defined in paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act to include beverages for human consumption and ingredients for beverages for human consumption. The soy milk is a beverage for human consumption.
However, paragraph 38-3(1)(d) of the GST Act provides that a supply of a beverage or as an ingredient for a beverage is not GST-free unless it is of a kind listed in the table in clause 1 of Schedule 2 of the GST Act (Schedule 2). In this case, we consider item 4 of Schedule 2 may be applicable.
Beverages which are listed under item 4 of Schedule 2 are 'beverages consisting principally of soy milk or rice milk, but not including flavoured beverages'. Flavoured soy milk is specifically not covered by item 4 of Schedule 2.
The explanation on beverages listed under item 4 of Schedule 2 is outlined in the ATO public ruling "Detailed Food List" (Food Lists). We enclose a copy for your reference. Soy milk is listed on the Food Lists as follows:
Item |
GST status |
Notes |
flavoured soy or rice milk beverages |
taxable |
Not a beverage of a kind specified in Schedule 2 of the GST Act.. |
soy milk (sweetened) |
GST-free |
Schedule 2, item 4 of the GST Act applies because the soy milk is only sweetened not flavoured (refer to ATO ID 2001/366). |
soy milk (unflavoured) |
GST-free |
Schedule 2, item 4 of the GST Act applies. |
Based on the above table a supply of flavoured soy milk is taxable. However a supply of sweetened soy milk is GST-free as the sugar is added as a sweetener and not as a flavouring agent.
As the flavoured soy milk is specifically not covered by item 4 of Schedule 2, the supply of the flavoured soy milk is excluded from being GST-free under section 38-3 of the GST Act.