| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012615728473
Ruling
Subject: FROZEN FRUIT JUICE STICK
Question
Is the supply of the food product GST-free?
Answer
No
Relevant facts and circumstances
• You are registered for goods and services tax (GST).
• You import the frozen food product and supply to supermarkets.
• The frozen food product is a frozen stick of fruit juice wrapped in a water proofed paper.
• The frozen food product must be stored frozen.
• The supermarkets sell the frozen food product as frozen sticks.
• Each frozen food product contains about 100 mls of frozen pure fruit juice.
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 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.
• beverages for human consumption and ingredients for beverages for human consumption - paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act
The frozen food product is for human consumption and therefore satisfies the meaning of food in section 38-4 of the GST Act.
However, section 38-3 of the GST Act specifies foods that are not GST-free. The relevant paragraphs which could apply to the frozen fruit juice are paragraph 38-3(1)(c) of the GST Act and paragraph 38-3(1)(d) of the GST Act.
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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Paragraph
38-3(1)(d) of the GST Act provides that 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).
The frozen food product contains pure fruit juice. However, the frozen food product is supplied as a frozen stick of pure fruit juice. Therefore we need to consider whether the frozen food product is a beverage for GST purposes. The meaning of beverage for GST purposes is outlined in the Goods and Service Determination GSTD 2002/2 which is about "what supplies of fruit and vegetable juices are GST-free?" Paragraphs 5 and 6 of GSTD 2002/2 state:
5. The GST Act defines beverage to include water, but does not otherwise discuss the meaning of a beverage. The word beverage appears in a similar context in the former sales tax legislation and has been considered by the courts to mean 'a drink of any kind' and, in turn, drink as 'any liquid which is swallowed to quench thirst or for nourishment.
6. For something to be a drink, it must be a liquid to be swallowed:
• to quench thirst; or
• for nourishment.
For GST purposes a beverage is therefore a liquid that is consumed by swallowing and the purposes for consumption is to quench thirst or for nourishment.
Based on the information provided, we consider that the frozen food product is not to be consumed as a liquid by swallowing. The supermarkets supply the food as a frozen food product, not as a liquid to be swallowed.
Therefore, we do not have to consider whether the frozen food product is a food listed in Schedule 2 as it is not a beverage. Paragraph 38-3(1)(d) of the GST Act has no application on the frozen fruit juice stick.
Frozen food product
The frozen food product is similar to an ice-cream food. Ice-cream food is listed in Schedule 1 as follows:
Items |
Category |
Food |
Item 28 |
Ice-cream food |
ice-cream, ice-cream cakes, ice-cream and ice-cream substitutes |
Item 29 |
frozen confectionery, frozen yoghurt and frozen fruit products (but not frozen whole fruit) | |
Item 30 |
flavoured ice blocks (whether or not marketed in a frozen state) | |
Item 31 |
any food similar to food listed in items 28 to 30 |
The packaging describes the frozen food product as food that contains 99% real fruit ingredients. The frozen food product are frozen and stored at or below minus 18 degrees C. The image of the frozen food product on the packaging shows the frozen frozen food product are wrapped in a water-proofed paper for consumption.
Based on the facts supplied we consider that the frozen food product would fall into either Item 29 of Schedule 1 of the GST Act or alternatively Item 31 of Schedule 1 of the GST Act.
As the frozen food product contains frozen (99%) fruit juice and is not a frozen whole fruit, the frozen food product is a food listed in item 29 of Schedule 1. Therefore the frozen food product is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act
The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.