ATO ID 2004/373: GST and rosemary skewers
Date of decision: 23 May 2002
Business line: Indirect Tax

Issue
Is the entity, an herb grower, 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 rosemary skewers?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells rosemary skewers.

Facts
The entity is an herb grower. The entity sells rosemary skewers that it picks from the field. The entity then dries them and packages them for sale. The rosemary skewers are used when cooking lamb or chicken kebabs. The meat is threaded onto the skewers and then cooked. During the cooking process, the rosemary skewers infuse its rosemary flavour and fragrance into the meat. 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 rosemary skewers are not consumed, they infuse its rosemary flavour and fragrance to the meat during the cooking process. As such, the rosemary skewers are considered goods added to food for human consumption, and therefore, 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). Rosemary skewers are not food of a kind specified in Schedule 1. In addition, the rosemary skewers 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 sells rosemary skewers.

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 Ingredients for food