Private ruling: GST and beverages
Published: May 2013

Ruling: Q1: Is the supply of your product GST-free? | A1: Yes.

Relevant facts and circumstances: · You are registered for goods and services tax (GST). · You have requested advice on the GST status of the supply of your product. · The product is marketed as a beverage for human consumption. · The product consists of a natural ingredient, water and sugar added as a sweetener.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act): Section 13-10 | Section 38-2 | Section 38-3 | Section 38-4 | Paragraph 38-4(1)(c) | Paragraph 38-4(1)(d) | Paragraph 38-3(1)(d) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause 1

Reasons for decision: Summary: A supply of food is GST-free under section 38-2 of the GST Act provided that the supply does not come within any of the exclusions listed in section 38-3 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Food is defined in paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act to include beverages for human consumption and ingredients for beverages for human consumption. The product is supplied as a beverage for human consumption. However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or an ingredient for a beverage is not GST-free unless it is of a kind listed in the table in clause 1 of Schedule 2 of the GST Act (Schedule 2). As the product is similar to other beverages, we consider item 4 of Schedule 2 maybe applicable to your product. Beverages which are listed under item 4 of Schedule 2 are 'beverages consisting principally of soy milk or rice milk, but not including flavoured beverages' . Flavoured soy milk or rice milk are specifically not covered by item 4 of Schedule 2. The explanation on beverages listed under item 4 of Schedule 2 is outlined in the Australian Taxation Office public ruling "Detailed Food List" (Food Lists). Beverages that are listed on the Food Lists under item 4 of Schedule 2 are: Item GST status Notes rice milk (unflavoured) GST-free Schedule 2, item 4 of the GST Act applies. soy milk (sweetened) GST-free Schedule 2, item 4 of the GST Act applies. because the soy milk is only sweetened not flavoured (refer to ATO ID 2001/366). soy milk (unflavoured) GST-free Schedule 2, item 4 of the GST Act applies. As your product is prepared from a natural ingredient, it is similar to the soy milk (from soybean) or rice milk (from rice). Therefore, the unflavoured product is similar to beverages of a kind specified under item 4 of Schedule 2. In addition, soy milk (sweetened) is listed on the Food Lists as GST-free under item 4 of Schedule 2. The sugar is added to the soy milk as a sweetener and is not considered to be flavouring. Therefore your product (sweetened) is considered to be an unflavoured product. Your unflavoured product is similar to beverages of a kind specified under item 4 of Schedule 2 and is therefore not excluded from being GST-free under section 38-3 of the GST Act. | Detailed Reasoning - Non taxable importation: Please note that section 13-10 of the GST Act provides that an importation is a non-taxable importation if: · it is a non-taxable importation under Part 3-2 of the GST Act, or · it would have been a supply that was GST-free or input taxed if it had been a supply (for example, it would be a GST-free supply had the supply been made in Australia). The supply of your product in Australia will be GST-free and consequently, the importation will be non-taxable under section 13-10 of the GST Act.