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This edited version has been archived due to the length of time since original publication.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.

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 written advice

Authorisation Number: 1012853769349

Date of advice: 4 August 2015

Ruling

Subject: Goods and services tax (GST) and the supply of a food product

Issue

Is the supply of a food product by the food supplier (you) GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, your supply of the food product is GST-free under section 38-2 of the GST Act.

Relevant facts and circumstances

    • You have developed and sold a food product formula to manufacturers in Australia.

    • Then you buy finished product from the Australian manufacturer and resell that to customers in Australia.

    • The manufacturer charges you GST on the supply of the food product

    • The food product is a product developed as a nutritional food combination that is in powdered form.

    • The food product is made up of several fruit powders.

    • The food product can be mixed with juice or water as a daily drink, or can be sprinkled onto foods such as yoghurt and breakfast cereals.

    • The food product is currently available in selected supermarket stores, selected health food and sports nutrition stores and on your website.

    • You have provided a copy of the brochure and print-outs which provides a detailed description of the food product.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 13-10

A New Tax System (Goods and Services Tax) Act 1999 Section 38-2

A New Tax System (Goods and Services Tax) Act 1999 Section 38-3

A New Tax System (Goods and Services Tax) Act 1999 Section 38-4

A New Tax System (Goods and Services Tax) Act 1999 Subsection 38-4(1)

A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause

Reasons for decision

A supply of food is GST-free under section 38-2 of the GST Act if the Immureds satisfies the definition of food in section 38-4 of the GST Act and its supply is not excluded from being GST-free by section 38-3 of the GST Act.

'Food' is defined in section 38-4 of the Act to include:

    (a) food for human consumption (whether or not requiring further processing or treatment);

    (b) ingredients for food for human consumption;

    (c) *beverages for human consumption;

    (d) ingredients for beverages for human consumption;

    (e) goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents for flavourings);…

    (* denotes a defined term under section 195-1 of the GST Act)

Furthermore, paragraph 38-4(1)(h) of the GST Act provides that 'food' does not include any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition.

Based on the information provided, the food product is made from fruit powders and can be added to smoothies, fruit juice or breakfast cereals. The food product is marketed as food for humans and sold in retail pharmacies. Hence, the food product is considered food for human consumption, and is not excluded by paragraph 38-4(1)(h) of the GST Act. Accordingly, the food product satisfies the definition of food in section 38-4 of the GST Act.

Under paragraph 38-3(1)(c) of the GST Act, 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). The Product is not food of a kind specified in Schedule 1.

Taking all factors into consideration, the food product is not considered to be food of a kind specified in the table in clause 1 of Schedule 1 and does not fall within any of the other exclusions in section 38-3 of the GST Act.

Accordingly, as the food product satisfies the definition of food and is not excluded from being GST-free, your supply of the food product will be a GST-free supply of food under section 38-2 of the GST Act.


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