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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012572283742

Ruling

Subject: Milk flavouring product

Question

Is the supply of a milk flavouring product GST free?

Advice

Yes

Relevant facts:

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

    · You retail a milk flavouring product.

    · You advised that the milk flavouring product is marketed for flavouring milk drinks.

    · The milk flavouring product consists of a dried preparation of flavouring ingredients packed in a bag and labelled for flavouring milk.

    · The label advises the consumer to add the milk flavouring product into hot milk for flavour.

    · The ingredients in the milk flavouring product consist of dried milk flavours, butter, soy powder, and emulsifier.

Reasons for decision

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) provided that the supply does not come within any of the exclusions listed in section 38-3 of the 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 milk flavouring product is for preparing a flavoured milk drink for human consumption.

However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or as 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 milk flavouring product is marketed as ingredients for preparing a flavoured milk drink, we consider that the milk flavouring product could be a beverage ingredient listed under item 9 of Schedule 2 (item 9). Ingredients for beverages listed under item 9 are 'dry preparation marketed for the purposes of flavouring milk".

Milk flavouring product

The milk flavouring product consists of a dried preparation of the flavouring ingredients for a milk drink. The instructions on the label advise the consumer to add the milk flavouring product into a hot milk drink for flavour. In addition, you advised that the milk flavouring product is marketed for flavouring milk drinks.

The milk flavouring product is a dry preparation marketed as an ingredient for flavouring milk and is therefore an ingredient for a beverage specified under item 9. The supply of the milk flavouring product is therefore not excluded from being GST-free under paragraph 38-3(1)(d) of the GST Act.


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