| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1051629763887
Date of advice: 23 January 2020
Ruling
Subject: GST and a supply of fruit powder
Question 1
Is the supply of fruit powder GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999(GST Act)?
Answer
Yes, your supply offruit powder is GST-free under section 38-2 of the GST Act.
Question 2
Is the supply of fruit powder is a non-taxable importation under paragraph 13-10(b) of the GST Act?
Answer
Yes, the importation of fruit powder is a non-taxable importation under paragraph 13-10(b) of the GST Act
Relevant facts and circumstances
You are an Australian entity that is registered for GST.
You import fruit powder to supply in Australia.
The fruit powder can be added 1 or 2 tbsp. to smoothies, yoghurt, juice, porridge, breakfast cereals and muesli or use in baking and cooking.
The fruit powder is not marketed to use as a beverage or drink mix but as a healthy whole food used for its nutritional benefits in many whole food recipes.
The fruit powder will be sold on-line from your website amongst other healthy foods.
A New Tax System (Goods and Services Tax) Act 1999 Section 13-5
A New Tax System (Goods and Services Tax) Act 1999 Paragraph 13-10(b)
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
Reasons for decision
Summary
The supply of fruit powder is a GST-free supply under section 38-2 of the GST Act.
Detailed reasoning
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)
· ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act)
· ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act)
· fats and oils marketed for culinary purposes (paragraph 38-4(1)(f) 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)
· a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2) (paragraph 38-3(1)(d) of the GST Act).
Based on the information provided, the fruit powder is made from 100% freeze dried.
The fruit powder is marketed for use in smoothies, yoghurt, juice, breakfast cereals and muesli. The fruit powder also can be used in other recipes.
The information you provided indicates that the fruit powder is usually used as ingredient for food rather than consumed as food on its own or as ingredient for beverages. Therefore, the fruit powder falls within the meaning of food under paragraph 38-4(1)(b) of the GST Act.
The fruit powder is not food of a kind specified in Schedule 1. In addition, the fruit powder does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of fruit powder is GST-free under section 38-2 of the GST Act.
Issue 2
GST is payable on all taxable importation of goods into Australia.
Section 13-5 of the 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.
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.
As discussed in Question 1 above, the fruit powder is the ingredients for food for human consumption. Hence, had it been a supply, the supply of the fruit powder would have been GST-free supply under section 38-2 of the GST Act.
Therefore, your importation of the fruit powder is a non-taxable importation under paragraph 13-10(b) of the GST Act.