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Edited version of your private ruling
Authorisation Number: 1012498699771
Ruling
Subject: GST and the importation of a food product
Question
Will your importation of a particular product (Product) be GST-free (non-taxable)?
Answer
Yes. Your importation of the Product will be non-taxable.
Relevant facts and circumstances
· You are registered for goods and services tax (GST).
· You import the Product for resale.
· The Product undergoes a process overseas that includes heating the Product at a certain temperature for a certain period of time.
· You label the Product before resale. The Product is not labelled as a product that has been roasted, flavoured or otherwise.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Schedule 1
Section 7-1
Section 13-10
Section 38-2
Section 38-3
Section 38-4.
Reasons for decision
Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on goods that are imported and entered for home consumption under the Customs Act 1901. However, section 13-10 of the GST Act further provides that an importation is non-taxable (not subject to GST) if:
· it is a non-taxable importation under Part 3-2 of the GST Act, or
· the supply of the goods in Australia would be GST-free or input taxed.
Supply of food
With respect to the second dot point above, the supply of a product is GST-free under section 38-2 of the GST Act as food provided the product satisfies the definition of food in section 38-4 of the GST Act and is not excluded from being GST-free by section 38-3 of the GST Act.
The definition of food in section 38-4 of the GST Act includes food for human consumption (whether or not requiring processing or treatment) and ingredients for food for human consumption. The Product, after further processing, will be marketed and sold as food for human consumption and consequently will satisfy the definition of food contained in section 38-4 of the GST Act.
The supply of the Product does not fall within any of the exclusions in section 38-3 of the GST Act except for possibly paragraph 38-3(1)(c). Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) or is food of a kind that is a combination of one or more foods at least one of which is food of such a kind.
Schedule 1 includes the following food items that may be of relevance when considering the GST treatment of your supply of the Product:
· seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way (Item 16 of Schedule 1).
Note that there are no other items in Schedule 1 that need to be considered in relation to the Product.
Seeds or nuts that are only lightly heated for blanching purposes will be GST-free when supplied as they are not considered to fall within Item 16 of Schedule 1. While the Product has been heated for a short time, this is purely because heating the Product is necessary to remove the Product's skin and to ensure that they can be safely stored. This process is distinct from the process that occurs in the case of roasted seeds and nuts. Roasted seeds and nuts have been cooked right through, and have normally been roasted at higher temperatures.
This reasoning is confirmed in the Detailed food list, a publication which is available on our website and which provides details of the GST status of major food and beverage product lines. This publication has the status of a public ruling for GST purposes.
In your case, you have also advised that the Product is not intended or suitable for consumption at the time of resale and requires further processing before it can be made available for human consumption. You do not label the Product as being roasted, salted or otherwise.
Therefore, in considering all this information, your Product is not considered to be food of a kind specified in Schedule 1 and consequently, the Product would be GST-free when sold. As a consequence, your importation of the Product would be non-taxable under section 13-10 of the GST Act.