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Edited version of your private ruling
Authorisation Number: 1012457938422
Ruling
Subject: GST and beverages
Question 1
Is the supply of your product GST-free?
Answer
Yes.
Relevant facts and circumstances
· You are registered for goods and services tax (GST).
· You have requested advice on the GST status of the supply of your product.
· The product is marketed as a beverage for human consumption.
· The product consists of a natural ingredient, water and sugar added as a sweetener.
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
Section 13-10
Section 38-2
Section 38-3
Section 38-4
Paragraph 38-4(1)(c)
Paragraph 38-4(1)(d)
Paragraph 38-3(1)(d)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause 1
Reasons for decision
A supply of food is GST-free under section 38-2 of the GST Act provided that the supply does not come within any of the exclusions listed in section 38-3 of the A New Tax System (Goods and Services Tax) Act 1999 (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 product is supplied as a beverage for human consumption.
However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or 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). As the product is similar to other beverages, we consider item 4 of Schedule 2 maybe applicable to your product.
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 or rice milk are specifically not covered by item 4 of Schedule 2.
The explanation on beverages listed under item 4 of Schedule 2 is outlined in the Australian Taxation Office public ruling "Detailed Food List" (Food Lists). Beverages that are listed on the Food Lists under item 4 of Schedule 2 are:
Item |
GST status |
Notes |
rice milk (unflavoured) |
GST-free |
Schedule 2, item 4 of the GST Act applies. |
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. |
As your product is prepared from a natural ingredient, it is similar to the soy milk (from soybean) or rice milk (from rice). Therefore, the unflavoured product is similar to beverages of a kind specified under item 4 of Schedule 2.
In addition, soy milk (sweetened) is listed on the Food Lists as GST-free under item 4 of Schedule 2. The sugar is added to the soy milk as a sweetener and is not considered to be flavouring. Therefore your product (sweetened) is considered to be an unflavoured product.
Your unflavoured product is similar to beverages of a kind specified under item 4 of Schedule 2 and is therefore not excluded from being GST-free under section 38-3 of the GST Act.
Non taxable importation
Please note that section 13-10 of the GST Act provides that an importation is a non-taxable importation if:
· it is a non-taxable importation under Part 3-2 of the GST Act, or
· it would have been a supply that was GST-free or input taxed if it had been a supply (for example, it would be a GST-free supply had the supply been made in Australia).
The supply of your product in Australia will be GST-free and consequently, the importation will be non-taxable under section 13-10 of the GST Act.