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Edited version of private advice
Authorisation Number: 1012653125029
Ruling
Subject: GST and various products
Question
What would be the goods and services (GST) status of the listed products when distributed in Australia by a GST registered entity?
Answer
The supply of each product would be taxable. The supply of some of the products would be taxable as they cannot be considered as food for GST purposes with the supply of the remaining products being taxable as supplements.
Relevant facts and circumstances
• You are not registered for goods and services tax (GST) but do have an Australian business number.
• You are to distribute the following types of products in Australia:
• products that are consumed by mixing with various foods or liquids
• products that recommend an amount or dosage
• products that have a use other than for the purposes of food.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 9-5
Section 38-2
Section 38-3 (with reference to Schedule 2)
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 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.
Supplements
Supplements (for example dietary supplements) are products that are generally added or mixed with existing food or consumed by mixing with water, juice or other types of liquids. They are also generally taken for therapeutic reasons to prevent or compensate for some real or imagined nutritional deficiency. It is also often the case that a supplement will have its consumption restricted to certain persons, directions that the product must be consumed under supervision or be consumed within a specified dosage.
Given this, while supplements are able to be consumed like food, they are something other than the basic foods envisaged as being GST-free. For this reason, we consider that supplements are not considered to be food for GST purposes under section 38-4 of the GST Act.
We also consider that supplements are not ingredients for food. A product is taken to be an ingredient for food if the product (or some essential element of the product) is an integral part of that food. Something that is sprinkled on top of a food or mixed with the food and is not essential to that food is not considered to be an ingredient, with the food acting merely as a carrier for the supplement.
Note that supplements marketed as an ingredient for a beverage are also excluded from being GST-free by section 38-3 of the GST Act (with reference to Schedule 2 of the GST Act) unless they are a dry preparation specifically marketed to be mixed with milk.
Given this, we consider that the products that are consumed by mixing with various foods or liquids or that recommend an amount or dosage are supplements and would therefore be taxable under section 9-5 of the GST Act when sold by a GST registered entity.
The products that have a use other than for food cannot be considered as food under section 38-4 of the GST Act. There are also no other legislative provisions in the GST Act or any other Act that would allow these products to be GST-free, hence, they would also be taxable under section 9-5 of the GST Act when sold by a GST registered entity.