Edited version of your private ruling

Authorisation Number: 1012489399533

Ruling

Subject: Foods

Question

Is the supply of the raw sea urchin roe GST-free?

Advice

Yes

Relevant facts:

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

· You carry on an enterprise of selling sea urchin roe.

· The raw roe is packed in a container and stored chilled (at low temperature).

· You believe that other sellers are not charging GST on their sea urchin roe.

· You are aware that caviar and similar fish roe are taxable. You advised that the sea urchin roe is not a fish roe.

· The Macquarie Dictionary defines sea urchin as "any echinoderm of the class Echinoidea, comprising marine animals having a more or less globular or discoid form, and a spine-bearing shell composed of many calcareous plates."

· Our research on the internet indicates that the sea urchin is an echinoderm (spiny skinned animals which include starfish, sea cucumbers, sea lilies and brittle stars). It has features which distinguish it from being a fish.

· The website also provides that sea urchin roe is a culinary delicacy. It can be eaten raw or cooked with other foods. The sea urchin roe flavor is a creamy combination of sweet, sour, salty and bitter.

· The gonads of both male and female sea urchins, usually called sea urchin roe, are culinary delicacies in many parts of the world. It can be eaten raw or cooked with other foods.

· The raw roe is supplied not for consumption on your premises.

Reasons for decision

A supply of a product 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 food for human consumption whether or not requiring processing or treatment (paragraph 38-4(1)(a) of the GST Act).

The raw sea urchin roe satisfies the definition of food as it is food for human consumption, whether or not requiring processing or treatment. It can be eaten raw or cooked with other foods.

However, subsection 38-3(1) of the GST Act specifies some foods that are excluded from being GST-free. The subsection states:

A supply is not GST-free under section 38-2 if it is a supply of:

(a) *food for consumption on the *premises from which it is supplied; or

(b) hot food for consumption away from those premises; or

(c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or

(d) 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

(e) food of a kind specified in regulations made for the purposes of this subsection.

* denotes a defined term in the GST Act

You advised that the sea urchin roe is packed in a container and stored chilled (at low temperature). It is supplied not for consumption on your premises. We consider paragraph 38-3(1)(c) of the GST Act may be applicable to the sea urchin roe.

Paragraphs 38-3(1)(c) of the GST Act - Food of a kind specified in Schedule 1

Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) or it is food consisting of a combination of one or more foods with at least one of which is food specified in Schedule 1.

The ATO view on "roe" is outlined in Goods and Service Tax Industry Issue - Detailed Food List (Detailed Food List) ruling as follows:

In your case, we have to determine whether the raw sea urchin roe falls into item 17 of Schedule 1 (item 17) or item 18 of Schedule 1 (item 18). The foods listed in item 17 are "caviar and similar fish roe" and item 18 is about food similar to that covered by item 15 of Schedule 1 (item 15) or item 16 of Schedule 1 (item 16), whether or not consisting wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not it is artificially flavoured. We do not need to consider item 19 of Schedule 1 (item 19) as it has no application to the raw sea urchin roe. Item 19 is about food consisting principally of food covered by items15 to 18 of Schedule 1.

Item 17

The Further Explanatory Memorandum (EM) to the GST Act states:

Fur 1.47 Schedule 1 lists products that will be taxed as savoury snacks. This list is also based on the WST definition with some minor changes. Caviar and other fish roe products are specifically included as savoury snacks.

Therefore, item 17 will apply to all fish roe or caviar because they are savoury snacks for GST purposes.

Sea urchin roe

Now we have to consider whether the raw sea urchin roe is food of a kind listed under item 17.

The words "caviar and similar fish roe" as described in item 17 is not defined in the GST Act and therefore they take on the ordinary meaning. The meaning of these words is defined in The Macquarie Concise Dictionary (3^nd Edition) (Dictionary) as follows:

roe "1. the mass of eggs, or spawn, within the ovarian membrane of the female fish (hard roe). 2. the milt or sperm of the male fish (soft roe)"

fish "1. any of various cold-blooded, completely aquatic vertebrates, having gills, fins, and typically an elongated body usually covered with scales"

caviar "1. the roe of sturgeon and other large fish, pressed and salted, considered a great delicacy

Please note the meaning of the word "roe" in the Dictionary refers to fish eggs or milt.

The sea urchin is an echinoderm (spiny skinned animals which include starfish, sea cucumbers, sea lilies and brittle stars). These invertebrate animals do not fit to the meaning of fish as described in the Dictionary.

Based on the above, we consider item 17 operates to make all types of fish roe as savoury snack foods and are therefore subject to GST. It is not limited to roe that is similar to caviar, or to roe that has similar uses to caviar. However, item 17 does not apply to the roe sourced from echinoderms such as sea urchin. The sea urchin has features which would distinguish it from being a fish. The gonads (reproductive organs) of the sea urchins, usually called sea urchin roe, are culinary delicacies in many parts of the world. It can be eaten raw or cooked with other foods.

Item 18 - roe and products consisting principally of roe

The Detailed Food List ruling provides if the "roe and products consisting principally of roe" is food of a kind similar to foods under item 15 or item 16, then the roe would be listed under item 18 as savoury snack foods.

The ATO ID 2002/298 and ATO ID 2003/1142 provide an explanation on food of a kind similar to foods under item 15 or item 16. The paragraphs in ATO ID 2002/1142 state:

Item 15 specifies potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips. The foods listed in Item 15 are snack foods that have undergone a cooking process and share certain other characteristics such as crispness.

Although none of the foods listed in Item 15 is comprised of fruit, for a food to be covered by Item 18, the food need only be of a kind that is similar to that covered by Item 15.

Banana chips are thin, sliced discs in the form of chips and are cooked in oil so that they are crisp and crunchy. They are generally supplied and labelled as banana 'chips'. Banana chips possess many of the characteristics of the foods specified in Item 15 and are therefore, similar to those foods.

Furthermore, banana chips can be distinguished from foods in the class of dried fruit, due to the cooking and flavouring process used in their manufacture. Dried fruits are dried to varying extents, but do not exhibit other similarities to the foods listed in Item 15.

And the paragraphs in ATO ID 2002/298 state:

Item 16 of Schedule 1 lists seeds or nuts that have been processed or treated by salting, spicing, smoking, or roasting, or in any other similar way and ….

All of the foods listed in Item 15 are generally cooked. The biltong is uncooked and although dry and hardened, is not similar in appearance or composition to a crisp, stick, straw or chip. Although the biltong is often eaten as a snack food in the same way that the crisps, sticks, straws and chips listed in Item 15 are, unlike those products, biltong has many other food uses as an ingredient for baking, sandwiches, salads, stews etc. Therefore, the biltong is not considered to be food similar to that covered by Item 15.

You advised that the raw roe is packed in a container and stored chilled (at low temperature).

The raw sea urchin roe is not food of a kind similar to those food covered by item 15. The raw roe is extracted from the sea urchin and stored chilled (at low temperature). The sea urchin roe is raw (uncooked) and it does not exhibit any similarities or characteristics such as crispness to the foods listed in Item 15.

The raw sea urchin roe is not food similar to those foods covered by item 16 as the raw roe has not been processed or treated by salting, spicing, smoking, or roasting, or in any other similar way to the foods listed in Item 16. The sea urchin roe can be eaten raw or used for cooking with other foods.

The raw sea urchin roe is not food listed under item 18 as savoury snacks as it is not food of a kind similar to foods under item 15 or item 16. The sea urchin roe is also not food listed under item 17.

Therefore, the raw sea urchin roe is not excluded from being GST-free by subsection 38-3(1) of the GST Act. The supply of the raw sea urchin roe is GST-free under section 38-2 of the GST Act