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Edited version of private advice
Authorisation Number: 1052227950321
Date of advice: 7 March 2024
Ruling
Subject: GST and supply of ingredient for a beverage
Question
Is the supply of the Products GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes.
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 section GST Act.
The supply of the Products is GST-free under section 38-2 of the GST Act because:
• the Products satisfy the definition of food in paragraph 38-4(1)(d) of the GST Act as ingredients for beverages for human consumption
• the Products are of a kind listed in item 8 of the table in clause 1 of Schedule 2 of the GST Act; and
• none of the exclusions in section 38-3 of the GST Act apply.
Relevant facts and circumstances
• You are a manufacturer of preparations for beverages.
• You are releasing the Products into the Australian market in the coming months.
• The Products are herbal products comprised of a sachet of dry powder, containing herbal ingredients and natural flavourings.
• The Products are to be dissolved in hot water for consumption, in a similar manner to how powdered tea, coffee and malted drinks are dissolved in hot water.
• The Products are not supplied in ready-to-drink form.
• The Products will be available in Australia in different flavours.
• The Products will be advertised and sold alongside (and in the vicinity of) tea, coffee, and other similar items in stores.
• The ingredients for the Products include vitamins and minerals in respect of which the labelling/packaging of the Products contains generic statements that the inclusion of these vitamins and minerals provide health benefits.
• Given the added vitamins and minerals, the Products are considered 'fortified' and require a specific classification under the Australian Food Standards. Due to this classification, you are required to include certain mandatory warnings on the Products' packaging which are applicable to this classification.
• You provided pictures of the packaging and samples of the Products. From the packaging, we extracted information including the ingredients and preparation instructions. There is a suggestion to drink the beverage at specific times of the day for its health benefits.
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 paragraph 38-3(1)(d).
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)(d).
A New Tax System (Goods and Services Tax) Act 1999 schedule 2.