Edited version of private advice

Authorisation Number: 1051949835931

Date of advice: 11 May 2022

Ruling

Subject: GST and supply of food

Question

Is the supply of the specified products (the Products) GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Relevant facts and circumstances

You are registered for GST.

You provided details of how the Products are manufactured.

You provided photos of the Products.

The Products are sold in bulk generally to food manufacturers for further processing into foods for human consumption. The Products are used by food manufacturers as ingredients in the manufacturing of food products and/or manufacturing of ingredients for beverages.

The Products also have specified non-food uses.

You do not sell the Products as an end product to the consumers.

When the Products are sold, you do not have any influence or control over how they are ultimately used and manufactured.

You provided photos of the Products in their packaging.

Your provided links to your website where the Products are advertised.

The packaging and marketing of the Products does not indicate that the Products are sold as ingredients for beverages.

The Products are not differentiated in any way that would suggest that they are marketed for non-food uses.

The Products are packaged in accordance with food regulations. The packaging includes the product name, batch number and date of manufacture. There are no product instructions nor is there any reference to the use or application of the Products.

The Products are stored in accordance with food regulations.

Relevant legislative provisions

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 the Products is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) as the Products are ingredients for food for human consumption under paragraph 38-4(1)(b) of the GST Act, and are not excluded from being GST-free by section 38-3 of the GST Act.

Detailed reasoning

A supply of a product 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:

(a)    food for human consumption (whether or not requiring processing or treatment)

(b)    ingredients for food for human consumption

(c)    beverages for human consumption

(d)    ingredients for beverages for human consumption

(e)    goods to be mixed with or added to food for human consumption, and

(f)     fats and oils for culinary purposes.

However, under paragraph 38-3(1)(c) of the GST Act, 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), or food that is a combination of one or more foods at least one of which is food of such a kind specified in Schedule 1.

Further, under paragraph 38-3(1)(d) of the GST Act, the supply of an ingredient for a beverage is only GST-free if it is an ingredient of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).

The Products

The Products have many uses.

The Products are used by food manufacturers as ingredients in the manufacturing of food products and/or manufacturing of ingredients for beverages.

You do not sell the Products as an end product to the consumers. The Products are sold in bulk to food manufacturers for further processing into foods for human consumption. Further the packaging and marketing of the Products does not indicate that the Products are sold as ingredients for beverages.

The Products also have non-food uses.

We consider that where a product has alternative non-food use, there is no requirement for the supplier to ascertain how the purchaser will use the product. The GST status of the product depends on whether it is a supply of food for human consumption as defined in the Act. The supplier can determine the GST status of a product based on the physical characteristics of the product as well as the nature of the supply. This includes product packaging, labelling, invoicing, marketing, delivery, storage conditions, and so on.

The Products are not differentiated in any way that would suggest that they are marketed for non-food uses. The Products are stored in accordance with food regulations. The Products are packaged in accordance with food regulations and include the product name, batch number and date of manufacture. There are no product instructions nor is there any reference to the use or application of the Products.

Based on the information provided we consider that the Products meet the definition of food under paragraph 38-4(1)(b) of the GST Act.

The Products are not food of a kind specified in Schedule 1 therefore they are not excluded from being GST-free by section 38-3 of the GST Act.