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Edited version of private advice
Authorisation Number: 1012683896451
Ruling
Subject: GST and food product
Question 1
Will your supply of the food product be GST-free?
Answer
Yes.
Relevant facts and circumstances
• You are registered for goods and services tax (GST).
• You are proposing to import and supply the food product.
• You submit that the food product is food for human consumption.
• The product is manufactured with a new technology.
• It comes in the same shape as another food product.
• The product can be eaten as it is or added to food or for garnishing.
• The product is a seaweed extract
• It is called a vegetarian food product due to its form but it is not the other food product.
Relevant legislative provisions
All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
Section 38-2
Subsection 38-3(1)
Paragraph 38-3(1)(c)
Paragraph 38-4(1)(a)
Section 38-4
Schedule 1
Paragraph 13-10(b)
Reasons for decision
Summary
Your supply of the food product is GST-free as it is food for human consumption under paragraph 38-4(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and is not excluded from being GST-free under paragraph 38-3(1)(c) of the GST Act.
The food product is also not food listed under item 17. Further, the food product is not food of a kind listed under item 18 of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) as savoury snacks as it is not food of a kind similar to foods under item 15 or item 16 nor item 19 as it is not food consisting principally of food covered by items 15 to 18.
Detailed reasoning
A supply of food is GST-free under section 38-2 of the 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.
The food product satisfies the definition of food because it is sold as food for human consumption. Therefore the food product will be GST-free unless it falls within any of the exclusions in section 38-3 of the GST Act. Of relevance to your circumstances is the exception under paragraph 38-3(1)(c) 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 that is specified in the table in clause 1 of Schedule 1 or it is food consisting of a combination of one or more foods with at least one of which is food specified in Schedule 1.
Schedule 1
We will now consider Schedule 1 for the food product.
The food product is not specifically included in Schedule 1. Nevertheless, this product may be subject to GST by virtue of paragraph 38-3(1)(c) of the GST Act which refers to food of a kind to those foods listed in Schedule 1.
The foods listed in item 17 are "caviar and similar fish roe" and item 18 is about food similar to that covered by item 15 of Schedule 1 (item 15) or item 16 of Schedule 1 (item 16), whether or not consisting wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not it is artificially flavoured. Item 19 is about food consisting principally of food covered by items15 to 18 of Schedule 1.
Now we have to consider whether the food product is food of a kind listed under item 17.
The words "caviar and similar fish roe" as described in item 17 is not defined in the GST Act and therefore they take on the ordinary meaning. The meaning of these words is defined in The Macquarie Concise Dictionary (3nd Edition) (Dictionary) as follows:
roe "1. the mass of eggs, or spawn, within the ovarian membrane of the female fish (hard roe). 2. the milt or sperm of the male fish (soft roe)"
fish "1. any of various cold-blooded, completely aquatic vertebrates, having gills, fins, and typically an elongated body usually covered with scales"
caviar "1. the roe of sturgeon and other large fish, pressed and salted, considered a great delicacy
The definition of caviar is the roe of sturgeon and other large fish, pressed and salted.
The food product is a product manufactured via a new technology to form a product that has the same shape to another product but it's an extract of seaweed with natural flavour. The food product does not fit the meaning of caviar as described in the Dictionary.
Based on the above, we consider item 17 does not apply to your food product as this product is not caviar nor fish roe.
The food product is not food of a kind similar to those food covered by item 15. The food product does not exhibit any similarities or characteristics such as crispness to the foods listed in Item 15.
The food product is not food similar to those foods covered by item 16 as the food product is not a seed or nut that has been processed or treated by salting, spicing, smoking, or roasting, or in any other similar way to the foods listed in item 16.
The food product is not food listed under item 18 as savoury snacks as it is not food of a kind similar to foods under item 15 or item 16. The food product is also not a food listed under item 19.
Therefore, the food product is not excluded from being GST-free by subsection 38-3(1) of the GST Act. The supply of the food product is GST-free under section 38-2 of the GST Act.
Other issues - Importation of the food product
Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed.
The ATO view on non-taxable importation under paragraph 13-10(b) of the GST Act is outlined in Goods and Service Tax Ruling GSTR 2003/15. Paragraphs 250 to 251 of GSTR 2003/15 outline the conditions for non-taxable importations of goods under paragraph 13-10(b) of the GST Act. The paragraphs state:
250. An importation of goods that would have been GST-free or input taxed, if it were a supply, is a non-taxable importation. For example, the supply of a wheelchair is GST-free, therefore, an importation of a wheelchair is a non-taxable importation.
251. In determining whether an importation, if it had been a supply, would have been GST-free or input taxed, the Commissioner considers that you need to hypothesise that the importation were a supply to the importer. If this hypothetical supply to the importer would have satisfied one of the exemptions in Chapter 3 of the Act, the importation is non-taxable.
Therefore, as the supply of the food product is GST free under section 38-2 of the GST Act, the importation of the food product is a non-taxable importation under paragraph 13-10(b) of the GST Act .