| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1051191373691
Date of advice: 23 January 2017
Ruling
Subject: GST and fruit powder
Question
Is GST payable on the sale of freeze dried fruit powder (powder)?
Answer
No, GST is not payable on the sale of the fruit powder.
Relevant facts and circumstances
You are registered for GST.
You sell freeze dried fruit powder to be mixed with food or beverages for example, baking food or in milk smoothies such as dairy, soy, almond, rice and coconut. The fruit powder will provide flavouring and nutrients for the food and milk.
You advertise the fruit powder as a super food. Your website includes information that the fruit powder has nutritional and other benefits, including Energy, Protein, Fat, Carbohydrates, Sugars, Dietary fibre, Sodium, Calcium and Iron.
Freeze drying entails the raw materials are prepared and frozen solid, and then freeze dried in a vacuum chamber. Water contained as ice in the cells of products will be converted to steam, while the shape, size, colour and other properties are retained. Following the freeze drying of the fruit, it is put through a milling machine to turn it into a powder. Nothing is added or taken out.
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 section 9-5
Reasons for decision
Under section 38-2 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a supply of food is GST-free. The definition of food is defined in section 38-4 of the GST Act and includes food for human consumption (whether or not it requires processing or treatment) and ingredients for food for human consumption.
The fruit powder is an ingredient for food for human consumption and therefore satisfies the definition of food under section 38-4 of the GST Act. However, under paragraph 38-3(1)(c) of the GST Act, certain supplies of food are not GST-free if it is food of a kind specified in the third column of the table in Schedule 1 of the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind.
The fruit powder is not a food listed, or of a kind listed, at any of the items in Schedule 1. Also, the fruit powder is not food that is a combination of one or more foods at least one of which is food of such a kind. Therefore the fruit powder is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
The fruit powder is also not excluded from being GST-free by virtue of any of the other paragraphs of subsection 38-3(1) of the GST Act therefore your supply of the fruit powder will be GST-free under section 38-2 of the GST Act.
Note:
As your supply of the fruit powder will be GST-free, your importation of the fruit powder is a non-taxable importation under paragraph 13-10(b) of the GST Act. GST will not be payable on your importation of the fruit powder.