Private ruling: GST and fruit powder
Date of advice: 23 January 2017
Published: April 2017

Ruling: Q1: Is GST payable on the sale of freeze dried fruit powder (powder)? | A1: No, GST is not payable on the sale of the fruit powder.

Relevant facts and circumstances: You are registered for GST. You sell freeze dried fruit powder to be mixed with food or beverages for example, baking food or in milk smoothies such as dairy, soy, almond, rice and coconut. The fruit powder will provide flavouring and nutrients for the food and milk. You advertise the fruit powder as a super food. Your website includes information that the fruit powder has nutritional and other benefits, including Energy, Protein, Fat, Carbohydrates, Sugars, Dietary fibre, Sodium, Calcium and Iron. Freeze drying entails the raw materials are prepared and frozen solid, and then freeze dried in a vacuum chamber. Water contained as ice in the cells of products will be converted to steam, while the shape, size, colour and other properties are retained. Following the freeze drying of the fruit, it is put through a milling machine to turn it into a powder. Nothing is added or taken out.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 38-2 | A New Tax System (Goods and Services Tax) Act 1999 section 38-3 | A New Tax System (Goods and Services Tax) Act 1999 section 38-4 | A New Tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision: Summary: Under section 38-2 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a supply of food is GST-free. The definition of food is defined in section 38-4 of the GST Act and includes food for human consumption (whether or not it requires processing or treatment) and ingredients for food for human consumption. The fruit powder is an ingredient for food for human consumption and therefore satisfies the definition of food under section 38-4 of the GST Act. However, under paragraph 38-3(1)(c) of the GST Act, certain supplies of food are not GST-free if it is food of a kind specified in the third column of the table in Schedule 1 of 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. The fruit powder is not a food listed, or of a kind listed, at any of the items in Schedule 1. Also, the fruit powder is not food that is a combination of one or more foods at least one of which is food of such a kind. Therefore the fruit powder is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. The fruit powder is also not excluded from being GST-free by virtue of any of the other paragraphs of subsection 38-3(1) of the GST Act therefore your supply of the fruit powder will be GST-free under section 38-2 of the GST Act. | Detailed Reasoning - Note:: As your supply of the fruit powder will be GST-free, your importation of the fruit powder is a non-taxable importation under paragraph 13-10(b) of the GST Act. GST will not be payable on your importation of the fruit powder.