Edited version of your private ruling

Authorisation Number: 1012586901480

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Ruling

Subject: GST and food

Question

Is your supply of a particular product (Product) GST-free?

Answer

Yes.

Relevant facts and circumstances

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

· You sell the Product in your retail outlets.

· The Product is comprised of a specific food type and has a consistency that allows it to be poured from its container.

· The Product's consistency is thicker than milk.

· The Product is sold in your refrigerators for chilled products, adjacent to dairy foods.

· The Product's container is specifically designed to allow the Product to be poured.

· The Product's website and container market the Product principally as something to be poured over other products and not as a beverage or ingredient for a beverage.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999:

Section 38-2

Section 38-3

Section 38-4.

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) if it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded 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 and ingredients for food for human consumption. In your case, you sell the Product in your retail outlets as food for human consumption and consequently, the Product satisfies the definition of food for GST purposes.

GST classification

The Product is essentially a specific food type but does have the consistency for it to also be considered as a beverage or as an ingredient for a beverage.

The supply of this specific food type would be GST-free under section 38-2 of the GST Act. However, where a product is a beverage, or an ingredient for a beverage, the supply of the product would be taxable under paragraph 38-3(1)(d) of the GST Act unless the product is listed in, or is of a kind to those products listed in, Schedule 2 of the GST Act (Schedule 2). In this case, the Product is not specifically listed in Schedule 2 and is not of a kind to those products listed in Schedule 2.

In deciding whether the Product should be treated as the specific food type or as a beverage, it is worth referring to the Federal Court case Lansell House Pty Ltd & Anor v FC of T 2010 ATC 20-173 (Lansell). In Lansell, it was necessary to determine if a product labelled as dried bread (a GST-free product) also had the characteristics to be considered a cracker biscuit (a taxable product). In making this determination, Lansell recognised that a food product may have characteristics to allow it to be classified into more than one food category (in our case either the specific food type or a beverage). However, Lansell further provides that for GST purposes, a food product can only have one classification and this classification should be based on the product's characteristics.

In coming to its decision, Lansell also considered (amongst other things) the product's:

· use

· in store display

· marketing

· tax treatment in the country of manufacture, and

· appearance.

In this case, the Product is principally marketed (both on its container and on its website) as something to pour over other food and not as a beverage or an ingredient for a beverage. The Product's container has also been designed to act as a type of jug or pouring vessel, making it difficult for the Product to be drunk straight from the container. Following the guidance provided by Lansell, the Product should be treated as the specific food type for GST purposes and not as a beverage or as an ingredient for a beverage.

Note that where a product is supplied as a GST-free food, the fact that it could be used as a beverage or as an ingredient for a beverage does not change the GST-free status of the product supplied.

As a result, your supply of the Product is GST-free under section 38-2 of the GST Act.