ATO ID 2004/434: GST and canned boiled nuts
Date of decision: 4 October 2002
Business line: Indirect Tax

Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies canned boiled nuts?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies canned boiled nuts.

Facts
The entity is a food supplier. The entity supplies canned boiled nuts. The canned boiled nuts do not require further cooking before being eaten and are often used in stir-fried dishes. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: 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). Canned boiled nuts are food for human consumption and therefore satisfy 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 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). Item 16 of Schedule 1 (Item 16) specifies 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. Boiled nuts are not considered to have been processed or treated in a way similar to the processes listed in Item 16 and are therefore not covered by this item. Accordingly, the excluding provisions of paragraph 38-3(1)(c) of the GST Act do not apply. In addition, the supply of canned boiled nuts does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies canned boiled nuts.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-2 section 38-3 paragraph 38-3(1)(c) section 38-4 paragraph 38-4(1)(a) Schedule 1 clause 1 Schedule 1 clause 1 table item 16
Subject references: Goods and services tax GST free GST food Food for human consumption