ATO ID 2008/144: GST and chocolate beverage drinking preparation
Date of decision: 25 September 2008
Business line: Indirect Tax

Issue
Does item 8 in the table in clause 1 of Schedule 2 to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) apply to make the supply of dry chocolate and cocoa drinking preparations GST-free, by virtue of section 38-2 of the GST Act?

Decision
Yes. Subject to the exceptions below, item 8 in the table in clause 1 of Schedule 2 to the GST Act applies to make the supply of dry chocolate and cocoa drinking preparations GST-free, by virtue of section 38-2 of the GST Act.

Facts
Dry chocolate and cocoa preparations are not in a form that is ready to drink. Dry chocolate and cocoa preparations are used as an ingredient for a beverage. Dry chocolate and cocoa preparations are marketed principally for the addition of hot water so as to create drinking chocolate or drinking cocoa.

Reasons for decision

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 Division 38 section 38-2 section 38-3 paragraph 38-3(1)(d) paragraph 38-4(1)(d) subsection 38-4(2) section 195-1 Schedule 2 clause 1 table item 6 Schedule 2 clause 1 table item 7 Schedule 2 clause 1 table item 8
Other references: The Australian Concise Oxford Dictionary 4th edition
Subject references: GST beverages Food & drink Goods and services tax GST free GST food Ingredients for beverages