Edited version of your private ruling

Authorisation Number: 1012446519000

Ruling

Subject: GST and fruit juice

Question 1

Does the definition of the word "concentrate" include fresh juices of more than 90% by volume of fruit and vegetable juices?

Answer

No. The reference to "concentrate" refers to the degree of concentration of the fruit juices regardless of the volume.

Question 2

If fresh juice is not included in the definition of the word "concentrate" will the supply to a cider producer of fresh apple or pear juice be GST free?

Answer

Yes.

The scheme commences on:

1 July 2012

Relevant facts and circumstances

· You are registered for goods and services tax (GST).

· You are considering selling fresh juice of more than 90% fresh juice content to a manufacturer.

· This juice will be supplied in bulk tankers on a needs basis.

· You process fruit by squeezing the juice from the fruit, pasteurising it and placing the juice in bulk tankers for transport.

· No additives are included.

· The process you use is not to concentrate the juice but sell it as a fresh juice.

· The fruit juice is in a form suitable for drinking when it is loaded into the bulk tankers.

Relevant legislative provisions

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

Section 38-2

Section 38-3

Paragraph 38-3(1)(d)

Section 38-4

Paragraph 38-4(1)(c)

Schedule 2: Item 10; Item 12

Reasons for decision

Questions 1 & 2

Detailed reasoning

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) 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 beverages for human consumption (paragraph 38-4(1)(c)).

The GST Act defines beverage to include water, but does not otherwise discuss the meaning of beverage. For the supply of a beverage to be GST-free the fruit and vegetable juices must be a beverage under the ordinary meaning of the word beverage.

Goods and Services Tax Determination GSTD 2002/2 Goods and services tax: what supplies of fruit and vegetable juices are GST-free? (GSTD 2002/2) provides that for something to be a beverage, it must be a liquid to be swallowed to quench thirst, or for nourishment. Liquids that are consumed other than to quench thirst or for nourishment (for example, liquids consumed for medicinal purposes) would not satisfy the requirements of Item 12.

Accordingly, your fruit juices are a beverage and can be consumed by humans at the supply stage. Therefore, as a beverage for human consumption, it satisfies paragraph 38-4(1)(c) of the GST Act.

However, under paragraph 38-3(1)(d) of the GST Act, a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind that is specified in the third column in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2) is not GST-free. That is the beverage or ingredient for a beverage of a kind specified must fall under Schedule 2 to be GST-free.

You have advised us that your products are freshly squeezed and pasteurised fruit juice, consist of more than 90% fruit juice content. Therefore your products fall under Item 12 of Schedule 2 which covers non-alcoholic non-carbonated beverages consisting of at least 90% by volume of juices of fruits or vegetables. In addition, there are no other exclusions under section 38-3 of the GST Act that would prevent your products from being GST-free.

Consequently, when you supply the fruit juices, you are making a GST-free supply under section 38-2 of the GST Act. It does not matter if the different fruit juices are supplied individually or mixed together.

Concentrates

Item 10 of Schedule 2 refers to concentrates for making non-alcoholic beverages, if the concentrates consist of at least 90% by volume of juices of fruits.

GSTD 2002/2 provides more information on the requirements of Item 10. At paragraph 9, GSTD 2002/2 states:

Item 10 provides that certain concentrates for making beverages can be supplied GST-free, where they are for making non-alcoholic beverages. These products contain concentrated fruit or vegetable juices, and when reconstituted by the addition of water, return to a drinkable 'pure juice' state. However, to be supplied GST-free, the concentrate must consist of at least 90% by volume of juices of fruits or vegetables.

Hence, the reference to concentrates refers to the degree of concentration of the juice, that is, it does not matter whether it is 150%, 400% or any other degree of concentration. It is not the level of concentration of the fruit juice that determines its classification; it is the volume of the fruit juice, which must consist of at least 90% by volume of juices of fruits or vegetables to be GST-free. This percentage also applies to Item 12 of Schedule 2

From the information submitted the fruit juices you supply are not in a concentrated form, but in a pure form of more than 90% by volume of fruit juice.