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Edited version of your written advice
Authorisation Number: 1051427118931
Date of advice: 11 September 2018
Ruling
Subject: GST on importation of goods
Question
Is GST payable on the importation of the Raw beans?
Answer
No.
Relevant facts and circumstances
You sell confectionery products.
You import the Raw beans which are used to make your products.
The beans are to be roasted and processed for the purpose of producing your products.
You provided the following processes that the beans go through from the time the pods are harvested to the packing of the beans:
The pods are picked from the trees when ripe. They are opened and the beans are removed and emptied into a fermentation tank to develop flavour. Once the mucilage has been removed from the outside of the seeds through the fermentation process, they are sun dried on raised beds or patios until they have hardened. The seeds are hand sorted and any defective seeds are discarded. The seeds are tested for overall moisture content. If the seeds are still humid, are left to dry until they are stable. Once the moisture contest has been deemed stable for shipping, the raw beans are transported in airtight lined bags to ensure the freshness of the product and to stop insects or liquids damaging the product. It is then protected inside sacks, marked and loaded into the container for shipping.
When you buy the beans, they come in lined bags and in bulk weigh.
You provided a picture of the Raw beans.
You process the beans further before you can use them as a raw material in making your products.
You provided pictures of the roasted beans and your products.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 13-5
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 paragraph 38-3(1)(c)
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)(a)
Reasons for decision
GST is payable on all taxable importation of goods into Australia.
Section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity makes a taxable importation if:
● goods are imported and
● the entity enters the goods for home consumption within the meaning of the Customs Act 1901.
However, an importation is not a taxable importation to the extent that it is a non-taxable importation.
Section 195-1 of the GST Act provides that ‘non-taxable importation’ has the meaning given by section 13-10 and Division 42.
Paragraph 13-10(b) of the GST Act provides that an importation is a non-taxable importation to the extent that, had it been a supply, the supply would have been a GST-free or input taxed supply.
Under section 38-2 of the GST Act a supply of food is GST-free 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 ‘food for human consumption (whether or not requiring processing or treatment)’ (paragraph 38-4(1)(a) of the GST Act).
The Raw beans are prepared by firstly extracting the beans from the pods. They are then fermented, dried and sorted. The Raw beans require further processing to make them into the raw material, which you then use to make your products. The Raw beans are supplied as food for human consumption and satisfies the definition of food contained in paragraph 38-4(1)(a) of the GST Act.
Section 38-3 of the GST Act provides that a supply of food is not GST-free if, among others, it is a supply of food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) (paragraph 38-3(1)(c) of the GST Act).
The Raw beans are not considered to be food of a kind specified in Schedule 1 and do not fall within any of the other exclusions in section 38-3 of the GST Act. Hence, the supply of the Raw beans is GST-free under section 38-2 of the GST Act.
Therefore, as the supply of the Raw beans is GST-free under section 38-2 of the GST Act, the importation is a non-taxable importation under paragraph 13-10(b) of the GST Act and GST is not payable on the importation.