ATO ID 2004/38: GST and edible chocolate body paint
Date of decision: 27 September 2002
Business line: Indirect Tax

Issue
Is the entity, a retailer, 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 edible chocolate body paint?

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

Facts
The entity is a retailer. The entity supplies edible chocolate body paint. The product is packaged with a brush or applicator, or in a plastic bottle designed to be squeezed to apply the contents. The ingredients, which include sugar, glucose syrup, milk solids, vegetable oil, cocoa powder, flavours, vegetable gum and water, are common to a variety of chocolate toppings and sauces. The product is marketed as edible body paint and is supplied as a novelty to be applied to the human body. 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 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, ingredients for food for human consumption, beverages for food for human consumption, ingredients for beverages for food for human consumption, and goods to be mixed with or added to food for human consumption. Some food products have alternative non-food uses. A product that is indicated to be for a use other than food cannot be a supply of food for the purposes of the GST Act, even if it is identical in substance to a GST-free food product. In determining whether a supply is a supply of a GST-free food, it is not only the physical characteristics of the product that are important but also the nature of the supply. Some of the ways in which a dual-purpose food product could be considered to be differentiated for non-food use are: The entity supplies the body paint with a paint brush and other instructions which indicate the product is not being supplied as food. The product is described as edible body paint and is supplied as a novelty to be applied to the human body. Therefore, the body paint has been designated as a novelty and not food. Further, the body paint has been labelled and marketed as body paint which is a non-food product. As such, the entity is supplying a product, the contents of which are normally regarded as food, as something other than food. Therefore, the supply of edible chocolate body paint is not a supply of 'food' as defined. The nature of this supply is more accurately characterised as a supply of body paint or a novelty product. The fact that this product is edible and consists of ingredients common to various chocolate sauces does not change the nature of the supply. The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision of 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 edible chocolate body paint.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 section 38-2 section 38-3 section 38-4 Division 40
Subject references: Goods and service tax GST food Food for human consumption GST supply Taxable supply