ATO ID 2002/981: GST and ice cream mix
Date of decision: 5 October 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 sells ice cream mix?

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

Facts
The entity is a food supplier. The entity is selling ice cream mix. The ice cream mix is an ingredient for making ice cream. It is not aerated and must be mixed with other ingredients and further processed to become ice cream. The ice cream mix is not intended to be eaten in its current state. The ice cream mix is not supplied for consumption on the premises from which it is supplied. 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 does not come within any of the exclusions listed in section 38-3 of the GST Act. The meaning of food in section 38-4 of the GST Act includes ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act). Ice cream mix is an ingredient used in making ice cream. As ice cream is food for human consumption, ice cream mix is an ingredient for food for human consumption. Therefore, the ice cream mix comes within the meaning of food contained in paragraph 38-4(1)(b) of the GST Act. However, 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). The category of food from Schedule 1 that is of particular relevance is 'ice cream food'. Specified in this category are the following items: Ice cream mix is not food of a kind specified in items 28 to 30 in Schedule 1. All of those listed items do not require the addition of any other ingredients in order to be ready for consumption, whereas the ice cream mix is not intended to be eaten in its current state. Instead, the ice cream mix, which is not aerated, must be mixed with other ingredients and further processed to become ice cream. Furthermore, for these same reasons, the ice cream mix is not covered by item 31 in Schedule 1 because it is not food that is similar to any of the products listed in items 28 to 30 in Schedule 1. Therefore, ice cream mix is not food of a kind that is specified in Schedule 1 and accordingly, is not excluded by paragraph 38-3(1)(c) of the GST Act from being GST-free. In addition, the ice cream mix is not sold for consumption on the premises from which it is supplied, nor does it 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 ice cream mix.

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 Schedule 1 clause 1 table item 28 Schedule 1 clause 1 table item 29 Schedule 1 clause 1 table item 30 Schedule 1 clause 1 table item 31
Subject references: Goods & services tax GST free GST food Ingredients for food