ATO ID 2002/14: GST and essence of chicken
Date of decision: 13 November 2001
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 essence of chicken?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies essence of chicken.

Facts
The entity is a food supplier. The entity supplies essence of chicken. The chicken essence is made of concentrated chicken extract and colour. It is used in making foods such as soups or stews and can be consumed as a tonic. 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 it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded by section 38-3 of the GST Act. The definition of food in section 38-4 of the GST Act includes ingredients food for human consumption (paragraph 38-4(1)(b) of the GST Act). Although essence of chicken can be consumed as a tonic, it is used in making foods such as soups and stews. Therefore, it is considered that essence of chicken is an ingredient for food for human consumption. 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). Essence of chicken is not a food of a kind specified in Schedule 1. In addition, essence of chicken 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 essence of chicken.

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)(b) Schedule 1 clause 1
Subject references: Goods & services tax GST free GST food Food for human consumption Ingredients for food