Edited version of private advice

Authorisation Number: 1052260886917

Date of advice: 14 June 2024

Ruling

Subject: GST and food additives

Question

Are you making a taxable importation under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you import the Product?

Answer

No, you are not making a taxable importation under section 13-5 of the GST Act when you import the Product.

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You import the Product from overseas into Australia.

You have provided Product Data Sheets, Safety Data Sheets and Nutritional Data Sheets relating to the Product.

The Product is almost colourless, pale-yellow liquid with a characteristic flavour.

The Product is a food flavour for human consumption. It is not a food flavour enhancer.

The Product is vegan suitable and classed as a flavour or synthetic flavour.

The Product is not marketed as an ingredient for confectionery or for any specific purpose other than a flavour to be added to food for human consumption.

The Product is a composition of propylene glycol,1520 (50% - 90% weight), benzyl alcohol,1519 (10%-25%) and synthetic flavouring substance(s) (5%-10% weight).

The product complies with the Australian New Zealand Food Standards Code.

The Product is not packaged and marketed for retail sale

The Product is supplied for use solely and predominantly, and is essential, in the composition of food.

The Product has a measurable' nutritional value which is calculated using FSANZ, FDA and supplier documentation.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 13-5

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 subsection 38-3(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-4(1)

A New Tax System (Goods and Services Tax) Regulations 2019 section 38-3.01

Reasons for decision

Section 13-5 of the GST Act provides that the importation of goods into Australia is taxable if they are entered for home consumption unless the importation is a non-taxable importation.

The meaning of "non-taxable importation" is provided in section 13-10 of the GST Act which states:

An importation is a non-taxable importation if:

(a) it is a non-taxable importation under Part 3-2; or

(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.

Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed.

The supply of the Product would not be input taxed under the GST Act. Therefore, we need to determine if the supply of the Product would be GST-free.

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 subsection 38-4(1) of the GST Act as:

(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 (including condiments, spices,

seasonings, sweetening agents or flavourings); .....

The Product is described as food for human consumption that can be used as ingredient for food for human consumption or mixed with or added to food for human consumption. Therefore, the Product satisfies the definition of food in paragraphs 38-4(1)(a), (b) and (e) of the GST Act.

However, subsection 38-3(1) of the GST Act provides that a supply of food is not GST-free under section 38-2 if the food is:

(a) for consumption on the premises from which it is supplied; or

(b) hot food for consumption away from those premises; or

(c) of a kind specified in Schedule 1 to the GST Act, or is a combination of foods at least one of which is

specified in Schedule 1; or

(d) a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified

in Schedule 2 of the GST Act; or

(e) of a kind specified in the A New Tax System (Goods and Services Tax) Regulations 2019 (GST

Regulations).

For the purpose of paragraph 38-3(1)(e) of the GST Act, section 38-3.01 of the GST Regulations specifies food additives other than exempt food additive.

Subsection 38-3.01(2) of the GST Regulations provides that each of the following is an exempt food additive:

(a) a food additive which, at the time of supply is packaged and marketed for retail sale;

(b) a food additive which, at the time of supply:

(i)    has a measurable nutritional value; and

(ii)   is supplied for use solely or predominantly in the composition of food; and

(iii)  is essential to the composition of that food.

The Product is not packaged and marketed for retail sale; thus, paragraph 38-3.01(2)(a) of the GST Regulations does not apply.

The Product has a measurable nutritional value, is supplied for use solely or predominantly in the composition of food and is essential to the composition of that food. Therefore, the Product is an exempt food additive under paragraph 38-3.01(b) of the GST Regulations. Consequently, the Product is not food of a kind specified for the purposes of paragraph 38-3(1)(e) of the GST Act.

In addition, the supply of the Product does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Product is GST-free.

As the supply of the Product would be GST-free, had the importation been a supply, the importation of the Product is a non-taxable importation under paragraph 13-10(b) of the GST Act. Accordingly, you are not making a taxable importation under section 13-5 of the GST Act when you import the Product.