ATO ID 2004/372: GST and dried bamboo leaves used to wrap and flavour food
Date of decision: 02 May 2002
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 dried bamboo leaves used to wrap and flavour food while cooking?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies dried bamboo leaves used to wrap and flavour food while cooking.

Facts
The entity is a food supplier. The entity supplies dried bamboo leaves that are used in cooking Asian foods such as dumplings, cakes and puddings. The dried bamboo leaves are softened by soaking them in water. The bamboo leaves are then used to wrap all the ingredients together for cooking. In the cooking process, the bamboo leaves add a special flavour to the food in a similar way as other spices. The bamboo leaves are not consumed, they are discarded before the cooked food is eaten. 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 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 goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings) (paragraph 38-4(1)(e) of the GST Act). Although the dried bamboo leaves are discarded before consumption, the leaves are used to wrap all the ingredients together for cooking and the leaves add a special flavour to the food in the cooking process. As such, the dried bamboo leaves are goods added to food for human consumption and satisfy the definition of food in paragraph 38-4(1)(e) of the GST Act. 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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Dried bamboo leaves are not food of a kind specified in Schedule 1. In addition, the dried bamboo leaves do 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 dried bamboo leaves used to wrap and flavour food while cooking.

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)(e) Schedule 1 clause 1
Subject references: Goods and services tax GST free GST food Food for human consumption Food seasoning