ATO ID 2001/501: GST and fruit jubes
Date of decision: 7 September 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 fruit jubes?

Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies fruit jubes. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a food supplier. The entity is supplying fruit jubes. Fruit jubes are a fruit, jube-like, snack product formed by combining concentrated fruit juice with glucose, sugar, gelatine and natural colour and flavour. The fruit juice content (rehydrated equivalent) of the product is over 95%. The product contains a substantial amount of sugar. The marketing describes the product as a convenient and delicious snack or treat. The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for decision
Summary: A supply of food is GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act. Section 38-4 of the GST Act provides the meaning of food. Under paragraph 38-4(1)(a) of the GST Act food includes 'food for human consumption'. Fruit jubes are food for human consumption. However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 8 of Schedule 1 (Item 8) lists confectionery, food marketed as confectionery, food marketed as ingredients for confectionery or food consisting principally of confectionery. The term 'confectionery' is not defined in the GST Act and therefore must be given its ordinary meaning. 'Confectionery' is defined in The Macquarie Dictionary (1997) as 'confections or sweets collectively'. 'Confection' is defined, amongst other things, as 'a sweet preparation (liquid or dry) of fruit or the like...'. Furthermore, Aickin J in the High Court decision Landau and Anor v. Goldwater and Anor (1976) 13 ALR 192 gave the following general description of the term 'confectionery': 'one of common usage which embraces a wide variety of articles, many readily recognisable as examples of confectionery. They are primarily small articles of a sweet character containing substantial amounts of sugar and regarded as being in the nature of a delicacy in whatever quantity they may be consumed ... '. Fruit Jubes are small articles of a sweet character containing substantial amounts of sugar. Furthermore, as the product is marketed as a delicious and convenient snack or treat, fruit jubes are regarded as being in the nature of a delicacy. Accordingly, fruit jubes are considered to be confectionery and are covered by Item 8. Therefore, the supply of the fruit jubes is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. The entity is registered for GST and the supply meets the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies fruit jubes.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 section 38-2 section 38-3 paragraph 38-3(1)(c) paragraph 38-4(1)(a) Division 40 Schedule 1 clause 1 Schedule 1 clause 1 table item 8
Case references: Landau and Anor. v Goldwater and Anor (1976) 13 ALR 192
Subject references: Goods & services tax GST food Food for human consumption GST supplies & acquisitions Taxable supply