Edited version of private advice

Authorisation Number: 1052244448679

Date of advice: 23 April 2024

Ruling

Subject: GST and food classification

Question

Is the importation of roasted nuts (Product) into Australia a taxable importation pursuant to section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

Relevant facts and circumstances

You are an Australian entity that is registered for GST.

You import roasted nuts (Product) into Australia.

The Product is heat treated.

You provided images of the packaging of the Product.

You provided flow diagrams of the process involved in roasting the Product.

You provided a sample of the Product.

The Product is vacuumed packed in a plastic bag.

The Product is labelled as roasted nuts.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-10

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 16

Reasons for decision

GST is payable on taxable importations. Section 13-5 of the GST Act provides that you make a taxable importation if:

•                     goods are imported; and

•                     you enter the goods for home consumption (within the meaning of the Customs Act 1901.

However, the importation is not a taxable importation to the extent that it is a non-taxable importation. Section 13-10 of the GST Act provides that an importation is a non-taxable importation if:

•                     it is a non-taxable importation under Part 3-2 of the GST Act; or

•                     it would have been a supply that was GST-free or input taxed if it had been a supply.

The Product does not fall within any of the items listed in Schedule 4 to the Customs Tariff Act 1995 that are referred to in subsection 42-5(1) of the GST Act. The other subsections of section 42-5 of the GST Act are not relevant to your case. Accordingly, the importation of the Products is not a non-taxable importation under paragraph 13-10(a) of the GST Act. We therefore determine if the importation of the Product is a non-taxable importation under paragraph 13-10(b) of the GST Act.

GST-free supply

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).

The Product is food for human consumption and therefore, satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that food is not GST-free if it is food 'of a kind' specified in Schedule 1 or food that is a combination of one or more foods, at least one of which is food of such a kind.

Schedule 1 lists food items that are not GST-free. Item 16 of Schedule 1, in the category of savoury snacks, provides that 'seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way' are not GST-free.

The word 'similar' is not defined in the GST Act and therefore it takes its ordinary meaning. The Macquarie Dictionary Online, www.macquariedictionary.com.au, (Macquarie Dictionary),accessed 22 April 2024, defines the word 'similar' as:

adjective 1. having likeness or resemblance, especially in a general way.

Further Paragraph 1.48 of the Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (EM) discusses item 16 as follows:

The treatment of seeds and nuts has been simplified [Item 16 of new Schedule 1A]. Seeds and nuts which have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way will be taxable. Similar to the effective WST treatment, unshelled nuts and raw nuts will be GST-free.

Item 16 specifically refers to seeds and nuts that have been processed or treated by salting, spicing or roasting or in any other similar way. As mentioned above, the legislative purpose underlying Item 16 is to exempt from GST nuts and seeds in their raw, unprocessed state. Once processing or other treatment is applied, nuts and seeds are taxable.

The Product has been heat treated. The manufacture flowchart states that the Product is roasted. The Product is also labelled as roasted. Therefore, we consider that the Product has been processed or treated in a similar way for the purposes of Item 16 and falls within Item 16.

As the Product falls within Item 16, it is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. Therefore, if the importation of the Product had been a supply, the supply of the Product would not be GST-free under section 38-2 of the GST Act. Furthermore, the supply of the Product would not be GST-free, or input taxed under any other provisions of the GST Act.

As the supply of the Product would neither be GST-free nor input taxed had the importation been a supply, the importation of the Product is not a non-taxable importation under paragraph 13-10(b) of the GST Act.

Accordingly, you are making a taxable importation under section 13-5 of the GST Act when you import the Product into Australia. As such you are liable to pay GST on the importation of the Product.