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Edited version of your written advice
Authorisation Number: 1013067420007
Date of advice: 12 August 2016
Ruling
Subject: GST and food - Pickled ginger
Question 1
Is your supply of pickled ginger to retailers GST-free?
Answer
Yes, your supply of pickled ginger to retailers is a GST-free supply of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Relevant facts and circumstances
You are a company registered for goods and services tax (GST).
You manufacture and supply pickled ginger to retailers/food providers.
The ginger root is sliced into thin pieces and undergoes a pickling process that involves placing the sliced ginger into large pots deep enough to fully cover all the ginger with a mixture of sugar, vinegar and salt.
Once brought up to temperature the mixture is placed in air tight containers for fermentation.
The finished product is sold to the retailer in commercial packages of 500g to 1kg bags.
The retailer provides the pickled ginger as an optional extra in the same way soy sauce is offered to end use customers (if desired) to be consumed with a sushi meal in store/or taken away for later consumption.
The pickled ginger is not being sold as a candy/sweet but as a pickled root vegetable.
Relevant legislative provisions
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 Item 13 of Schedule 1
Reasons for decision
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 by section 38-3 of the GST Act.
Food is defined in section 38-4 of the GST Act to include goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings): paragraph 38-4(1)(e) of the GST Act. Pickled ginger is a good to be mixed with or added to food for human consumption.
However, 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 third column in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Item 13 of Schedule 1 (Item 13) lists 'crystallised ginger and preserved ginger' as food that is not GST-free. Item 13 appears under the category heading of Confectionery.
Although pickling is a preserving process, it is considered that preserved ginger is food of a kind which has the essential character of confectionery, while pickled ginger does not have this character. Pickled ginger is supplied as a condiment, not as a confectionery product and is not food of a kind specified in the third column of Schedule 1.
Accordingly, the supply of pickled ginger is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act and so is GST-free under section 38-2 of the GST Act.