Private ruling: Goods and services tax (GST) and the supply of a food product
Date of advice: 18 August 2015
Published: August 2015

Ruling: A1: Yes, your supply of the food product is GST-free under section 38-2 of the GST Act.

Relevant facts and circumstances: • You have developed and sold a food product formula to manufacturers in Australia. • Then you buy finished product from the Australian manufacturer and resell that to customers in Australia. • The manufacturer charges you GST on the supply of the food product • The food product is a product developed as a nutritional food combination that is in powdered form. • The food product is made up of several fruit and herb powders. • The food product can be mixed with juice or water as a daily drink, or can be sprinkled onto foods such as yoghurt and breakfast cereals. • The food product is currently available in selected supermarket stores, selected health food and sports nutrition stores and on your website. • You have provided a copy of the brochure and print-outs which provides a detailed description of the food product.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 13-10 | 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 Subsection 38-4(1) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause

Reasons for decision: Summary: A supply of food is GST-free under section 38-2 of the GST Act if the food product satisfies the definition of food in section 38-4 of the GST Act and its 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 Act to include: (a) food for human consumption (whether or not requiring further processing or treatment); (b) ingredients for food for human consumption; (c) *beverages for human consumption; (d) ingredients for beverages for human consumption; (e) goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents for flavourings);… (* denotes a defined term under section 195-1 of the GST Act) Furthermore, paragraph 38-4(1)(h) of the GST Act provides that 'food' does not include any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition. Based on the information provided, the food product is made from fruit and herb powders and can be added to smoothies, fruit juice or breakfast cereals. The food product is marketed as food for humans and sold in retail pharmacies. Hence, the food product is considered food for human consumption, and is not excluded by paragraph 38-4(1)(h) of the GST Act. Accordingly, the food product satisfies the definition of food in section 38-4 of the GST Act. 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). The Product is not food of a kind specified in Schedule 1. Taking all factors into consideration, the food product is not considered to be food of a kind specified in the table in clause 1 of Schedule 1 and does not fall within any of the other exclusions in section 38-3 of the GST Act. Accordingly, as the food product satisfies the definition of food and is not excluded from being GST-free, your supply of the food product will be a GST-free supply of food under section 38-2 of the GST Act.

Issue: Is the supply of a food product by the food supplier (you) GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?