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Edited version of private advice
Authorisation Number: 1051633294955
Date of advice: 11 February 2020
Ruling
Subject: GST and a supply of various flavoured plant based dessert style products
Question
Is the supply of various flavoured plant based dessert style products ('Products') by you GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes, your supply of the Products GST-free under section 38-2 of the GST Act.
Relevant facts
You are planning to launch a range of new products into the market, which are described as plant-based silky dessert style snacks made from coconut milk benchmarked against chilled dairy desserts, in term of taste and texture.
The Products will be marketed as a plant-based alternative to dairy desserts.
The Products are required to be refrigerated.
The Products have the following four flavours at launch:
· chocolate salted caramel
· chocolate
· caramel; and
· Vanilla.
The Products do not need to be heated, thawed or prepared in any other way before consumption.
Ingredients in Products:
Water, Coconut Cream, Sugar, Cocoa Butter, Cornflour, Chicory Root Fibre, Dairy Free Organic Chocolate, Organic Cocoa, Organic Cane sugar, emulsifier (Organic sunflower lecithin), Cocoa Powder, Salt Agar Agar, Guar Gum, Carob Gum, Natural Flavour, Caramelised Sugar Syrup, Natural Colour.
Manufacturing process of the Products
The following manufacturing steps are taken to prepare the Products for retail sale:
1) Ingredients are weighed in accordance with ingredient list percentage and batch size.
2) Ingredients are blended and mixed to dissolve and emulsify ingredients.
3) Fully blended product is then pasteurised or sterilised to achieve desired microbiological control of the product prior to filling into finished packaging.
4) Product is cooled to desired filling temperature.
· Depending on the technology used, the product can either be filled into the cups at an reduced temperature (between 15°c and 50°c) using a completely aseptic filling system; or filled into the packaging at a temperature greater than 80°c. Both systems are used to achieve microbiological control of the finished product in packaging.
5) Product is then filled into cups or pouches, sealed, coded, and packed into cartons for sale
Reasons for decision
Summary
The supply of the Products 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)
The Products are food for human consumption and therefore, satisfy the definition of food in the GST Act.
Item 20 in the table in clause 1 of Schedule 1 to the GST Act lists 'puddings' amongst other things.
Issue 13 of the Food Industry Partnership Issues Register on the Australian Taxation Office website considers the meaning of 'pudding'. It states that the term 'pudding' is not defined in the GST Act and is therefore afforded its ordinary meaning. Therefore, the word 'pudding' is defined to mean:
a cooked food that is a sweet or savoury dish made in many forms and of various ingredients, as flour (or rice, tapioca, or the like), milk and for eggs, with or without fruit, meat or other ingredients and is a cooked dish consisting of various sweet or savoury ingredients, especially as enclosed within a flour-based crust or mixed with flour, for eggs, etc., and boiled or steamed; a baked batter mixture.
The Products are not cooked. Therefore, they are not a pudding.
The Products are not covered by item 20 or any of the other items in Schedule 1 to the GST Act and 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 exclusion at paragraph 38-3(1)(c) of the GST Act does not apply.
None of the other exclusions in subsection 38-3(1) of the GST Act apply. Therefore, your supply of Products is GST-free under section 38-2 of the GST Act. Hence, GST is not payable on your supply of the Products.