ATO ID 2002/878: GST and supply of used cooking oil
Date of decision: 21 February 2001
Business line: Indirect Tax

Issue
Is the entity, a supplier of used cooking oil, 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 used cooking oil, that has been extracted from cooking vats, to a company that recycles the oil?

Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies used cooking oil, that has been extracted from cooking vats, to a company that recycles the oil. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a supplier of used cooking oil. It cleans and filters oil from deep fry cooking vats. The entity supplies the used cooking oil to a company for recycling. At the time of supply, the used cooking oil is not able to be used in any food application (that is, it cannot be used in food or to cook food). The entity is registered for goods and services tax (GST) and 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: The entity supplies used cooking oil, that has been extracted from cooking vats, to a company for recycling. The oil is not able to be used in any food application. Therefore, the used cooking oil is not an ingredient for food for human consumption nor is it goods to be mixed with or added to food for human consumption. In addition, as the oil cannot be used for food and is being sold to an oil recycling company, the used cooking oil is not marketed for culinary purposes. Therefore, the supply of used cooking oil is not a supply of food for the purposes of section 38-4 of the GST Act. Accordingly, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies used cooking oil that has been extracted from cooking vats, to a company that recycles the oil. 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 in 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 used cooking oil that has been extracted from cooking vats, to a company that recycles the oil.

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(1)(b) section 38-4(1)(e) section 38-4(1)(f) Division 40
Subject references: Goods and services tax GST free GST food Ingredients for food GST supplies & acquisitions Taxable supply