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Edited version of your written advice
Authorisation Number: 1051189987387
Date of advice: 9 March 2017
Ruling
Subject: GST and supply of smoothies
Question
Is the supply of the Smoothies GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, provided the Smoothies consist of at least 90% by volume of juices of fruits or vegetables.
Relevant facts
You sell different flavoured Smoothies.
The Smoothies are packaged either in disposable spout pouches or protein shaker containers. The only label on the product is your logo and contact details.
Your customers pre-order the Smoothies and you deliver them to your customers' home or workplace.
The Smoothies are non-alcoholic and non-carbonated beverages.
The lists of ingredients and their quantities in each of the Smoothies indicate that the Smoothies contain more than 90% by volume of juices of fruit and vegetable. The Smoothies also contain other ingredients which amount to less than 10% by volume.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5.
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 Paragraph 38-3(1)(d).
A New Tax System (Goods and Services Tax) Act 1999 Section 38-4.
A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(c).
A New Tax System (Goods and Services Tax) Act 1999 Schedule 2.
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.
Food is defined in section 38-4 of the GST Act to include beverages for human consumption. The Smoothies are beverages for human consumption for the purposes of the GST Act and therefore, satisfy the definition of food under paragraph 38-4(1)(c) of the GST Act.
However, paragraph 38-3(1)(d) of the GST Act provides that a beverage is not GST-free under section 38-2 of the GST Act unless it is a beverage of a kind specified in the third column of the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).
Of relevance is item 12 of Schedule 2 (Item 12) which lists non-alcoholic non-carbonated beverages, if they consist of at least 90% by volume of juices of fruits or vegetables.
Based on the information provided, the Smoothies are non-alcoholic and non-carbonated beverages.
For the purpose of satisfying the requirement in item 12 it is necessary to determine whether the beverage consists of at least 90% by volume of juices of fruit or vegetables by referring to the constituents of the beverage actually existing at the time the beverage is supplied.
The Smoothies are made up of various ingredients which by themselves may be GST-free. However, it is the end product that needs to be considered.
The lists of ingredients and their quantities in each of the Smoothies indicate that the Smoothies contain mostly fruit and vegetable juices. The Smoothies also contain other ingredients which amount to less than 10% by volume.
Based on the ingredients lists you provided, the Smoothies contain more than 90% by volume of juices of fruits or vegetables. Hence, the requirement in item 12 is satisfied and the exclusion at paragraph 38-3(1)(d) of the GST Act does not apply. Therefore, the supply of the Smoothies is GST-free under section 38-2 of the GST Act.
We note that depending on availability, the fruit and vegetable ingredients of the Smoothies may vary from the above list. Provided the Smoothies consist of at least 90% by volume of juices of fruits or vegetables, the supply of the Smoothies will be GST-free.