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Ruling
Subject: GST and food
Question
Is your supply of your food products (Products) taxable?
Answer
Yes.
Relevant facts and circumstances
· You are registered for goods and services tax (GST).
· You supply two products.
· The Products are labelled as ingredients to be added to, or to make, beverages.
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999
Section 9-5
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 Products 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 only relevant food meeting your circumstances is given in paragraph 38-4(1)(d) of the GST Act which lists ingredients for beverages for human consumption.
The Products are ingredients to be added to, or to make, beverages. Hence, the Products can be considered food for human consumption under paragraph 38-4(1)(d) of the GST Act. Consequently, the supply of the Products would be GST-free provided they are not exempted under section 38-3 of the GST Act.
Exempted food items
Under paragraph 38-3(1)(d) of the GST Act, a supply of an ingredient for a beverage is not GST-free unless it is an ingredient of a kind that is specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
There are no items in Schedule 2 that would capture your Products. Consequently, the supply of the Products would not be GST-free supply under section 38-2 of the GST Act but taxable under section 9-5 of the GST Act.