ATO ID 2004/677: GST and spirulina powder
Date of decision: 9 August 2004
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 spirulina powder?

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

Facts
The entity is a food supplier. The entity supplies spirulina powder. The label on the spirulina product describes it as a natural food containing protein, chlorophyll and vitamins. Promotional materials describe the product as a nutrient rich food and indicate that the product can be added to a range of recipes such as dips, bread, biscuits, gravies and etcetera as an ingredient, or added directly to dishes such as salads. Spirulina powder may also be consumed by adding to water or fruit juice. 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 its 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) under paragraph 38-4(1)(a) of the GST Act. Although spirulina powder is sometimes used as an ingredient in food or consumed by adding to a beverage, it is generally supplied as a food in its own right and therefore satisfies 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). Spirulina powder is not food of a kind specified in Schedule 1. In addition, the supply of spirulina powder 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 spirulina powder. Note: this decision should not be interpreted as meaning that spirulina tablets or capsules are GST-free. Spirulina tablets and capsules are not food and are subject to GST.

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
Subject references: Goods & services tax GST free GST food Food for human consumption