ATO ID 2005/361: GST and lecithin powder or granules
Date of decision: 26 November 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 sells lecithin powder or granules?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells lecithin powder or granules.

Facts
The entity is a food supplier. The entity supplies lecithin and soy lecithin (derived from eggs and soybeans respectively). The lecithin is not supplied in tablet or capsule form. It is supplied in either granular or powdered form, and is usually consumed by adding to foods such as cereals 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) and ingredients for food and beverages for human consumption. Lecithin granules and powder may be consumed with foods such as cereals and fruit juices. The powder and granules are not added as an ingredient of the food or beverage. Lecithin is therefore not an ingredient for these food items, rather it is food in its own right. As such, lecithin satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act. 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). Lecithin is not food of a kind specified in Schedule 1. In addition, the supply of lecithin 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 lecithin powder or granules.

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
Related ATO interpretative decisions: ATO ID 2005/272
Subject references: Goods and services tax GST free GST food Food for human consumption