Private ruling: Goods and services tax (GST) and beverages
Date of advice: 2 November 2015
Published: November 2015

Ruling: Q1: Is GST payable on your sale of beverage X? | A1: No. | Q2: Is GST payable on your sale of beverage Y? | A2: No.

Relevant facts and circumstances: You are registered for GST. You manufacture two new beverages/smoothie. They are beverage X and beverage Y. You will supply the beverages within Australia. The ingredients of beverage X are fruit juice (less than %), fruit puree and other ingredients. The ingredients of beverage Y are fruit juice (less than %), fruit puree and other ingredients. The beverages are non-alcoholic and non-carbonated.

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

Reasons for decision: Summary: Your sales of beverage X are GST-free supplies of a beverage under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Detailed Reasoning - Detailed reasoning: GST is payable on any taxable supplies. You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*Denotes a term defined in the GST Act) The indirect tax zone is Australia. Section 38-2 of the GST Act states 'A supply of *food is GST-free '. However, a supply of food is not GST-free if an exclusion in subsection 38-3(1) of the GST Act applies. Paragraph 38-4(1)(c) of the GST Act provides that food includes beverages for human consumption. Beverage X is a beverage for human consumption. Therefore, it is food for the purposes of section 38-2 of the GST Act. Paragraph 38-3(1)(d) of the GST Act provides that a beverage, other than a beverage of a kind specified in the third column of the table in clause 1 of Schedule 2 to the GST Act, is not GST-free. Item 12 in the table in clause 1 of Schedule 2 to the GST Act (item 12) lists non-alcoholic non-carbonated beverages that consist of at least 90% by volume of juices of fruits or vegetables. We consider that the phrase 'juices of fruit' in items 10, 11 and 12 in the table in clause 1 of Schedule 2 to the GST Act should be interpreted as applying to fruit juice containing fruit pulp or fruit puree. Fruit juice products containing fruit pulp and/or fruit puree fall within the ordinary meaning of fruit juice because they are liquid and are extracted from fruit. Beverage X is a non-alcoholic non-carbonated beverage consisting of at least % by volume of juices of fruits. The fruit puree content is included in the calculation of the juice of fruit percentage because beverage X is liquid and the fruit puree is extracted from fruit. Therefore, the product is covered by item 12. As beverage X is a beverage covered by an item in the table in clause 1 of Schedule 2 to the GST Act, the exclusion at paragraph 38-3(1)(d) of the GST Act does not apply. As beverage X is food and none of the exclusions in subsection 38-3(1) of the GST Act apply, your sales of beverage X are GST-free under section 38-2 of the GST Act. Hence, GST is not payable on your sales of beverage X. | Detailed Reasoning - Question 2: GST is not payable on your sales of beverage Y for the same reasons as why GST is not payable on your sales of beverage X.