Private ruling: GST and supply of ingredient for a beverage
Date of advice: 7 March 2024
Published: 15 April 2024

Ruling: Q1: Is the supply of the Products GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. A supply of food is GST-free under section 38-2 of the GST Act 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 section GST Act. The supply of the Products is GST-free under section 38-2 of the GST Act because: • the Products satisfy the definition of food in paragraph 38-4(1)(d) of the GST Act as ingredients for beverages for human consumption • the Products are of a kind listed in item 8 of the table in clause 1 of Schedule 2 of the GST Act; and • none of the exclusions in section 38-3 of the GST Act apply.

Relevant facts and circumstances: • You are a manufacturer of preparations for beverages. • You are releasing the Products into the Australian market in the coming months. • The Products are herbal products comprised of a sachet of dry powder, containing herbal ingredients and natural flavourings. • The Products are to be dissolved in hot water for consumption, in a similar manner to how powdered tea, coffee and malted drinks are dissolved in hot water. • The Products are not supplied in ready-to-drink form. • The Products will be available in Australia in different flavours. • The Products will be advertised and sold alongside (and in the vicinity of) tea, coffee, and other similar items in stores. • The ingredients for the Products include vitamins and minerals in respect of which the labelling/packaging of the Products contains generic statements that the inclusion of these vitamins and minerals provide health benefits. • Given the added vitamins and minerals, the Products are considered 'fortified' and require a specific classification under the Australian Food Standards. Due to this classification, you are required to include certain mandatory warnings on the Products' packaging which are applicable to this classification. • You provided pictures of the packaging and samples of the Products. From the packaging, we extracted information including the ingredients and preparation instructions. There is a suggestion to drink the beverage at specific times of the day for its health benefits.

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)(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)(d). | A New Tax System (Goods and Services Tax) Act 1999 schedule 2.