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This edited version has been archived due to the length of time since original publication.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

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Edited version of your written advice

Authorisation Number: 1051511566705

Date of advice: 02 May 2019

Ruling

Subject: GST classification of ice cream mix

Question

Is your supply of Ice-cream and Sorbet pods (Products) a GST-free supply?

Answer

Yes.

This ruling applies from the date of this ruling until a date four years from the date of this ruling.

Relevant facts and circumstances

    ● You are registered for GST.

    ● You manufacture ice cream mix frozen products in pods for supply to retailers.

    ● You have advised that the Products function as ice cream mix to be aerated and whipped into ice-creams for consumption. The Products you supply are in the form of frozen liquids and not in a form for consumption in the current state.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

section 38-2

section 38-3

paragraph 38-3(1)(c)

section 38-4

paragraph 38-4(1)(b)

Schedule 1 clause 1

Schedule 1 clause 1 table item 28

Schedule 1 clause 1 table item 29

Schedule 1 clause 1 table item 30

Schedule 1 clause 1 table item 31

Reasons for decision

Summary

Your supply of the Products is a GST-free supply. The Products come within the definition of food for human consumption in section 38-4 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

The Products do not fall within Items 28 to 31 of Schedule 1 of the GST Act as the Products are not ready for consumption as an ice-cream food without further processing. .

Detailed reasoning

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 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 Products at the point of sale from you to the retailers, are in the form of frozen liquids, are not aerated and must be further processed to become ice cream.

The Products function as an ice cream mix. As an ice cream mix, the Products are not intended to be eaten in the current state. Ice cream mix is an ingredient used in making ice cream. As ice cream is food for human consumption, ice cream mix is an ingredient for food for human consumption. Therefore, the Products come within the meaning of food contained in paragraph 38-4(1)(b) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).

The category in Schedule 1 that is relevant for consideration in this case is 'ice cream food'. Specified in this category are the following items:

      ● item 28 - ice cream, ice cream cakes, ice creams and ice cream substitutes;

      ● item 29 - frozen confectionery, frozen yoghurt and frozen fruit products (but not frozen whole fruit);

      ● item 30 - flavoured ice blocks (whether or not marketed in a frozen state); and

      ● item 31 - any food similar to food listed in items 28 to 30.

ATO ID 2002/981 states: ‘Ice cream mix is not food of a kind specified in items 28 to 30 in Schedule 1. All of those listed items do not require the addition of any other ingredients in order to be ready for consumption, whereas the ice cream mix is not intended to be eaten in its current state. Instead, the ice cream mix, which is not aerated, must be mixed with other ingredients and further processed to become ice cream’.

The Products are not food of a kind specified in items 28 to 30 in Schedule 1. All of those listed items are ready for consumption, whereas the Products are not intended to be eaten in its current state. Instead, the Products, which are not aerated, must be further processed to become ice cream, ready for consumption.

Furthermore, for these same reasons, the Products are not covered by item 31 in Schedule 1 because it is not food that is similar to any of the products listed in items 28 to 30 in Schedule 1.

Therefore, the Products are not food of a kind that is specified in Schedule 1 and accordingly, is not excluded by paragraph 38-3(1)(c) of the GST Act from being GST-free.

Therefore, you are making a GST-free supply under section 38-2 of the GST Act when you sell the Products.


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