ATO ID 2002/298: GST and dried, hardened biltong
Date of decision: 13 November 2001
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 biltong in its dry and hardened form?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies biltong in its dry and hardened form.

Facts
The entity is a food supplier. The entity supplies biltong in its dry and hardened form. Biltong is a dried, flavoured meat product that requires no refrigeration. It is made from uncooked lean meat that is dried in the open air to varying degrees. Traditional biltong (as is being supplied in this case) is dry and hard. It is sold in strips, pieces and slices. It is a source of high protein that is eaten on its own (often by bushwalkers) but can also be used in salads, sandwiches, as an ingredient for savoury baked goods, quiches and omelettes or reconstituted for use in stews and soups. 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. The meaning of food in section 38-4 of the GST Act includes food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). Biltong is food for human consumption and therefore satisfies the definition of food in section 38-4 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). Of relevance to the classification of dry, hardened biltong, is item 18 of Schedule 1 (Item 18). Item 18 specifies that food similar to that covered by items 15 or 16 of Schedule 1, whether or not consisting wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not it is artificially flavoured, is not GST-free. Item 16 of Schedule 1 lists seeds or nuts that have been processed or treated by salting, spicing, smoking, or roasting, or in any other similar way and therefore, is not relevant to the classification of biltong. However, item 15 of Schedule 1 (Item 15) lists potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips. Therefore, although biltong in its dry, hardened form is not covered by any of the foods listed in Item 15, it must be determined whether it is food similar to that covered by Item 15. All of the foods listed in Item 15 are generally cooked. The biltong is uncooked and although dry and hardened, is not similar in appearance or composition to a crisp, stick, straw or chip. Although the biltong is often eaten as a snack food in the same way that the crisps, sticks, straws and chips listed in Item 15 are, unlike those products, biltong has many other food uses as an ingredient for baking, sandwiches, salads, stews etc. Therefore, the biltong is not considered to be food similar to that covered by Item 15. As such, the dry and hardened biltong is not excluded from being a GST-free supply of food under paragraph 38-3(1)(c) of the GST Act. In addition, as the supply does not fall within any of the other exclusions in section 38-3 of the GST Act, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies the dry and hardened biltong.

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 15 Schedule 1 clause 1 table item 16 Schedule 1 clause 1 table item 18
Related ATO interpretative decisions: ATO ID 2002/299
Subject references: Goods & services tax GST free GST food Food for human consumption