Edited version of private advice

Authorisation Number: 1052276552839

Date of advice: 22 August 2024

Ruling

Subject: GST and protein products

Question 1

Is your supply of the Protein Nuggets a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. Your supply of the Protein Nuggets, is GST-free under section 38-2 of the GST Act because the Protein Nuggets:

•         are ingredients for food for human consumption and satisfy the definition of food in 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.

Question 2

Is your importation of the Protein Nuggets a non-taxable importation under section 13-10 of the GST Act?

Answer

Yes.

GST is payable on taxable importations. Subsection 13-5(1) of the GST Act provides that you make a taxable importation if:

a)    goods are imported; and

b)    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.

We consider that the Protein Powders and the Protein Nuggets (Protein Products) are goods imported by you. Therefore paragraph 13-5(1)(a) of the GST Act is satisfied. You acquire the Protein Products from the suppliers overseas and import them into Australia. Hence you meet the requirement of paragraph 13-5(1)(b) of the GST Act as you are the entity that enters the goods for home consumption.

Section 13-10 of the GST Act provides that an importation is a non-taxable importation if:

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

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

Your importation of the Protein Nuggets is a non-taxable importation under paragraph 13-10(b) of the GST Act, as had the importation been a supply it would have been GST-free. Hence GST is not payable on your importation of the Protein Nuggets.

Question 3

Is your supply of the Protein Powders a GST-free supply under section 38-2 of the GST Act?

Answer

Your supply of Protein Powders is GST-free under section 38-2 of GST Act because the Proteing Powders:

•         are ingredients for food for human consumption and satisfy the definition of food in 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.

Question 4

Is your mportation of the Protein Powders a non-taxable importation under section 13-10 of the GST Act?

Answer

Yes. Your importation of the Protein Powders is a non-taxable importation under subsection 13-10(b) of the GST Act, as had the importation been a supply it would have been GST-free. Hence GST is not payable on your importation of the Protein Powders.

Relevant facts and circumstances

You are an Australian resident entity that is registered for GST.

You are an importer and wholesale distributor of Protein Products for the food and beverage industry.

The Protein Products imported and supplied by you in Australia in bulk, are divided into two categories: Protein Nuggets and Protein Powders. The Protein Products are used in beverage, dairy, bars and confectionery, bakery and snacks. You do not supply any goods by retail.

The Protein Products meet the Australian Food Standards and are safe to consume by consumers.

You sell the Protein Products to food manufacturers in bulk bags/cartons. The food manufacturers use the products as one of their ingredients to create finished processed foods that are then sold by them to retailers and/or consumers.

You provided the manufacturing process of the Protein Products.

You do not further process the imported products in Australia.

The Protein Products have a high level of protein and are best consumed as part of a finished product to ensure that protein intake is managed effectively in the consumers diet.

The majority of your customer base include food manufacturing companies who use the Protein Products as an ingredient to their own products. Other customers may repackage the products at their own facility and resell to manufacturers.

The Protein Products have a wide range of potential applications. While some products within the range have differing variations of functionality and are more suitable to some applications rather than others, it is your customers that determine how the products are used, and those customers may use the same product to produce a variety of different items.

There are no instructions included on the original packaging of the Protein Products when they are imported into Australia. This is consistent with the wholesale market in which you operate and in which the soy protein products are supplied. You sell the Protein Products to customers in the original packaging that they are imported in.

To the best of your knowledge, you do not have any customers that use the Protein Products for applications other than for food or beverage applications. Additionally, you do not intend to pursue other streams of revenue other than food markets.

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)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(b)

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)(b)