Private ruling: GST and fruit products
Published: June 2012

Ruling: Q1: Will your supply of the fruit products be GST-free? | A1: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You are to sell fruit products (Products). The Products are made from 100% fruit.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 : Section 38-2 | Section 38-3 | Section 38-4.

Reasons for decision: Summary: The only provision in the GST Act that may allow your supply of the Products to be GST-free is as a supply of food which is GST-free under section 38-2 of the GST Act. The food, however, must not come within any of the exclusions listed in section 38-3 of the GST Act. Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of the foods defined in this provision, the most relevant to your circumstances is paragraph 38-4(1)(a) which provides for food for human consumption. In your case, the Products will be sold as food for human consumption. Consequently the Products are a food, the supply of which can be treated as being GST-free, provided they are not exempted under section 38-3 of the GST Act. | Detailed Reasoning - Exempted food items: 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), or food that is a combination of one or more foods at least one of which is food of such a kind. Schedule 1 includes the following food items that may be of relevance when considering the GST treatment of your supply: · food known as muesli bars or health food bars and similar food stuffs (item 11 of Schedule 1) · crystallised fruit, glace fruit and drained fruit (item 12 of Schedule 1), and · food similar to that covered by item 15 or 16 of Schedule 1, whether or not it consists wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not it is artificially flavoured (item 18 of Schedule 1). Items 15 and 16 of Schedule 1 cover savoury snacks such as crisps, crackling, prawn chips and seeds that have been processed by salting, spicing, roasting or in any other similar way. | Detailed Reasoning - Muesli or health food bars: The ATO view on what constitutes a muesli or health food bar is provided by the GST determination GSTD 2008/2. Paragraph 7 of GSTD 2008/2 provides that a typical muesli or health food bar contains ingredients similar to those found in muesli breakfast cereals plus additional sugars and other ingredients necessary to achieve a consistency suitable for presentation in bar form. Some muesli or health food bars also contain confectionery pieces such as chocolate chips or yogurt pieces. Given the guidance provided by paragraph 7 of GSTD 2008/2, your Products cannot be considered as being muesli or health food bars as they consist totally of fruit. | Detailed Reasoning - Food similar to muesli or health food bars: Paragraphs 8 and 9 of GSTD 2008/2 provide that foods are similar to muesli or health food bars if they can be compared to these products through their physical presentation and ingredients. The ingredients of the Products are such that they could not be considered as being similar to a muesli or health food bar. Consequently, your supply of the Products is not exempted from being GST-free by item 11 of Schedule 1 | Detailed Reasoning - Crystallised fruit, glace fruit and drained fruit: The Products are not made from fruit that has been crystallised, glace fruit or drained. Consequently, your supply of the Products is not exempted from being GST-free by item 12 of Schedule 1. | Detailed Reasoning - Food similar to that covered by item 15 or 16 of Schedule 1: Using the approach taken in determining if your Products were similar to muesli bars, we must first look at the foods listed under items 15 and 16 of Schedule 1 and then determine the characteristics of these foods that make them similar. In this case, the listed foods are all products that have been cooked and processed in such a way as to add strong flavours and to make the product hard or crispy. Your Products (which could be considered a type of snack) cannot be considered a savoury snack as they do not possess the said characteristics of the foods listed under items 15 and 16 of Schedule 1. Hence, your supply of the Products is not exempted from being GST-free by item 18 of Schedule 1. Given these circumstances, the Products are a food as defined by subsection 38-4(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and are not exempted from being food for human consumption under 38-3 of the GST Act. Consequently, their supply will be GST-free.

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