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Edited version of private advice
Authorisation Number: 1051850062773
Date of advice: 14 July 2021
Ruling
Subject: GST and food
Question
Is the supply of the specified popsicles range (the Products) GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No. The supply of the Products is a taxable supply.
Relevant facts and circumstances
You sell a range of popsicles under a specified brand name.
You are registered for GST.
The Products are a mix of various specified food and beverage products that are blended together and put into a plastic sleeve to create popsicle shaped products.
The Products are packaged in plastic sleeves labelled with the ingredients on the front and back. Each Product is of a specific volume.
The Products are sold in a frozen state and must be kept in the freezer. The Products can be consumed frozen or melted. The Products when consumed are likely bitten, crunched, slurped or sucked.
The Products come in a variety of flavours. You provided the ingredient lists and nutritional information.
Your website provides further information about the Products. You market the Products as popsicles.
The Products are sold online and in retail stores.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
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)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 28
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 29
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 30
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 31
Reasons for decision
Summary
The supply of the Products is not GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
The supply of the Products is a taxable supply under section 9-5 of the GST Act.
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)
- beverages for human consumption (paragraph 38-4(1)(c) of the GST Act).
The Products consist of various foods and beverages that are blended together. The Products are sold to consumers in a frozen state and are packaged in plastic tubes to resemble popsicles. The Products are ready to eat and are consumed by likely being bitten, crunched, slurped or sucked.
The information on your website indicates that the Products are intended to be and are marketed as popsicles.
Although the Products can be consumed when melted, they are intended to be consumed in their frozen state.
We consider that the Products have sufficient characteristics to qualify as food for human consumption under paragraph 38-4(1)(a) of the GST Act. The Products are not beverages. The fact that the Products can be consumed when melted does not alter their characterisation as food.
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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). As such, the issue is whether the Products are 'food of a kind' specified in Schedule 1.
The phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. Macmillan Publishers Australia, The Macquarie Dictionary Online, www.macquariedictionary.com.au, (Macquarie Dictionary),accessed 25 June 2021 does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean:
noun 1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4 ...
Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question.
Further, the GST case Lansell House Pty Ltd v Commissioner of Taxation [2010] FCA 329 established that food classification decisions are a matter of 'overall impression'. That is, in deciding the proper classification of a food product, various factors including the product's ingredients, use, marketing, manufacturing process and appearance need to be considered to form an overall impression.
Therefore, whether a food product is of a kind of food specified in Schedule 1, is a question of fact and degree and a matter of overall impression.
The food category in Schedule 1 that is relevant for consideration is 'ice-cream food', which states:
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Food that is not GST-free |
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|
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Item |
Category |
Food |
|
28 29 30 31
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Ice-cream food |
ice-cream, ice-cream cakes, ice-creams and ice-cream substitutes frozen confectionary, frozen yoghurt and frozen fruit products (but not frozen whole fruit) flavoured iceblocks (whether or not marketed in a frozen state) any *food similar to food listed in item 28 to 30 |
Within the category of ice-cream food, item 30 of Schedule 1 (item 30) refers to flavoured iceblocks (whether or not marketed in a frozen state).
The word 'iceblock' is not a defined term in the GST Act. The Macquarie Dictionary defines the term as:
noun 1. an ice cube.
2. Especially Qld, NSW, ACT, SA and Tasmania a frozen flavoured confection on a stick. Compare icy pole, paddle-pop; Qld, Especially North Qld by jingo (def. 2); Especially WA and Tasmania popsicle.
The word 'popsicle' is defined in the Macquarie Dictionary as:
noun Especially WA and Tasmania a frozen flavoured confection on a stick.
Compare icy pole, paddle-pop; Qld, Especially North Qld by jingo (def. 2); Especially Qld, NSW, ACT, SA and Tasmania iceblock (def. 2).
The Products are marketed as popsicles and are intended to be popsicles. The Products are sold in plastic sleeves that resemble popsicles. The Products have similar ingredients to popsicles. The Products come in a number of flavours. The Products are intended to be consumed frozen. The Products are sold frozen to consumers, ready to eat as popsicles.
We consider the Products are of a kind of flavoured iceblocks listed in item 30.
As the Products are covered by item 30, they are excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. As such, the supply of the Products is not GST-free under section 38-2 of the GST Act.
The supply of the Products is a taxable supply as all the requirements of section 9-5 of the GST Act are satisfied as follows:
- you supply the Products for consideration
- the supply is made in the course or furtherance of an enterprise that you carry on
- you supply the products in Australia
- you are registered for GST, and
- the supply of the Products is neither GST-free nor input taxed.