Private ruling: GST and sale of food products
Date of advice: 9 August 2017
Published: November 2017

Ruling: Q1: Is the supply of the plant products GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Organic Plant Seeds GST-free Organic Plant Oil GST-free Organic Plant Flour GST-free Organic Plant Powder GST-free

Relevant facts and circumstances: You are a plant food wholesaler, retailer, manufacturer and exporter. You are registered for GST. You currently sell your plant products as ingredient for beauty products. However, you also sell them as food to customers in particular countries. Your products are currently sold in specialised stores. However, from a certain date you expect to sell your products for food uses in supermarkets and other outlets. From a certain date, you expect to sell your products to food manufacturers who will use them when producing snack food items. Your website includes information about the plant’s nutrition content. The plant is high in vitamins and minerals. The plant products can be added to various recipes or eaten on their own. Your website and the product information sheets you provided contain the following: ● Your plant products are highest grade certified organic suitable for human consumption. ● The Organic Plant Seeds are marketed as a food ingredient for use in snacks, baked goods, beverages and in salads. It can also be added to meals or enjoyed on their own for a unique nutrition boost. ● The Organic Plant Flour is marketed as a food ingredient for use in snacks, baked goods, beverages and in salads. It can be added to most baking recipes as a gluten-free alternative. It can be added to a range of recipes and used for its nutritional content. ● The Organic Plant Oil is marketed for use in various recipes and in salads. The Organic Plant Oil is used as a flavour-enhancer in many recipes. ● The Organic Plant Powder is marketed for use in smoothies and shakes, or sprinkled on yogurt, cereal or fruit. It can be mixed into salad dressing, soup stock, burgers, or nut butters and can also be used in any baked good to replace some of the flour that is used. It can be used on anything that could do with a healthy protein boost. You provided a Recipe Book which includes recipes with plant products as ingredients. The Recipes page of your website also has additional recipes which include plant products as ingredients.

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 Paragraph 38-3(1)(c). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-3(1)(d). | A New Tax System (Goods and Services Tax) Act 1999 Section 38-4. | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(a). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(b). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(d). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(f). | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 38-4(1)(c).

Reasons for decision: Summary: The supply of the plant products listed is a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). This GST-free treatment applies from a certain date when you sell your products for food uses. | Detailed Reasoning - Detailed reasoning: Under section 38-2 of the GST Act a supply of food is GST-free if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded from being GST-free by section 38-3 of the GST Act. Food is defined in section 38-4 of the GST Act to include: ● food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act) ● ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act) ● ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act) ● fats and oils marketed for culinary purposes (paragraph 38-4(1)(f) of the GST Act) Section 38-3 of the GST Act provides that a supply of food is not GST-free if, among others, it is a supply of: ● food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) (paragraph 38-3(1)(c) of the GST Act) ● a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2) (paragraph 38-3(1)(d) of the GST Act). Your plant products are highest grade certified organic suitable for human consumption. You currently sell your plant products as ingredient for beauty products. However, you sell them as food to customers in particular countries. Although you are supplying food grade plant products, when you differentiate the plant products by supplying them as ingredients for beauty products, such supply is not a supply of food for human consumption. In this instance, despite the fact that the plant products are food grade quality, they are not considered as food for the purposes of section 38-4 of the GST Act. Accordingly, you are not making a GST-free supply under section 38-2 of the GST Act when you sell food grade plant products for cosmetic purposes. From a certain date you will sell your plant products for food uses. You will sell to specialised stores, supermarkets and other outlets. You also expect to sell your hemp products to food manufacturers who will use them to produce snack food items and the like. | Detailed Reasoning - Organic Plant Seeds: The Organic Plant Seeds are marketed as a food ingredient for use in snacks, baked goods, beverages and in salads. It can also be added to meals or enjoyed on their own for a unique nutrition boost. The information you provided indicates that the Organic Plant Seeds are usually used as ingredient for food rather than consumed as food on their own or as ingredient for beverages. Therefore, the Organic Plant Seeds fall within the meaning of food under paragraph 38-4(1)(b) of the GST Act. However, 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 that is specified in Schedule 1. Item 16 of Schedule 1 to the GST Act (Item 16) provides that seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way is not GST-free. From the information provided, the Organic Plant Seeds have not been processed or treated by way of salting, spicing, smoking or roasting, or in any other similar way. Therefore, the Organic Plant Seeds do not fall under Item 16. The Organic Plant Seeds are not considered to be food of a kind specified in Schedule 1 and does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Organic Plant Seeds is GST-free under section 38-2 of the GST Act from a certain date. | Detailed Reasoning - Organic Plant Flour: The Organic Plant Flour is marketed as a food ingredient for use in snacks, baked goods, beverages and in salads. It can be added to most baking recipes as a gluten-free alternative. It can be added to a range of recipes and used for its nutritional content. The information you provided indicates that the Organic Plant Flour is usually used as ingredient for food rather than consumed as food on its own or as ingredient for beverages. Therefore, the Organic Plant Flour falls within the meaning of food under paragraph 38-4(1)(b) of the GST Act. The Organic Plant Flour is not a food of a kind specified in Schedule 1. In addition, the Organic Plant Flour does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Organic Plant Flour is GST-free under section 38-2 of the GST Act from a certain date. | Detailed Reasoning - Organic Plant Oil: The Organic Plant Oil is marketed for use various recipes and in salads. The Organic Plant Oil is used as a flavour-enhancer in many recipes. The Organic Plant Oil is considered an ingredient for food for human consumption, within the meaning of food under paragraph 38-4(1)(b) of the GST Act or fats and oils marketed for culinary purposes in accordance with paragraph 38-4(1)(f) of the GST Act. The Organic Plant Oil is not food of a kind specified in Schedule 1. In addition, the Organic Plant Oil does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Organic Plant Oil is GST-free under section 38-2 of the GST Act from a certain date. | Detailed Reasoning - Organic Plant Powder: The Organic Plant Powder is marketed for use in beverages, cereal or fruit. It can also be used in any baked good to replace some of the flour that is used. It can be used on anything that could do with a healthy protein boost. The information you provided indicates that the Organic Plant Powder is usually used as ingredient for food rather than consumed as food on its own or as ingredient for beverages. Therefore, the Organic Plant Powder falls within the meaning of food under paragraph 38-4(1)(b) of the GST Act. The Organic Plant Powder is not food of a kind specified in Schedule 1. In addition, the Organic Plant Powder does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the Organic Plant Powder is GST-free under section 38-2 of the GST Act from a certain date.