Private ruling: GST and supply of a beverage
Published: September 2017

Ruling: Q1: Is your supply of the natural tree juice GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.


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)(c). | A New Tax System (Goods and Services Tax) Act 1999 Schedule 1, Clause 1, item 12

Reasons for decision: Summary: A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (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 GST Act. Food is defined in section 38-4 of the GST Act to include beverages for human consumption. The natural tree juice is a beverage for human consumption for the purposes of the GST Act and therefore, satisfies the definition of food under paragraph 38-4(1)(c) of the GST Act. However, paragraph 38-3(1)(d) of the GST Act provides that a beverage is not GST-free under section 38-2 of the GST Act unless it is a beverage of a kind specified in the third column of the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). Of relevance is item 12 of Schedule 2 (Item 12) which lists non-alcoholic non-carbonated beverages, if they consist of at least 90% by volume of juices of fruits or vegetables. Based on the information provided, the product is a non-alcoholic and non-carbonated beverage. For the purpose of satisfying the requirement in item 12 it is necessary to determine whether the beverage consists of at least 90% by volume of juices of fruit or vegetables by referring to the constituents of the beverage actually existing at the time the beverage is supplied. The lists of ingredients and their quantities in each of the flavours of the product indicate that the product contains more than 90% natural tree sap. The issue that needs to be considered is whether natural tree sap is considered juices of fruits or vegetables. The natural tree sap is not from the fruit or seeds of the particular species of tree. Accordingly, natural tree sap is not considered to be the juice of a fruit. As the term 'vegetable' is not defined in the GST Act, the ordinary meaning of the term applies. The Macquarie Dictionary Online (as at 30 March 2017) provides the following definition of 'vegetable' and 'tree': | Detailed Reasoning - vegetable: noun 1. Any herbaceous plant, annual, biennial, or perennial, whose fruits, seeds, roots, tubers, bulbs, stems, leaves, or flower parts are used as food, as tomato, bean, beet, potato, asparagus, cabbage, etc. 2. The edible part of such plants, as the fruit of the tomato or the tuber of the potato. 3. Any member of the vegetable kingdom; a plant. | Detailed Reasoning - tree: noun 1. A perennial plant having a permanent, woody, self-supporting main stem or trunk, usually growing to a considerable height, and usually developing branches at some distance from the ground. 2. Any of various shrubs, bushes, and herbaceous plants, as the banana, resembling a tree in form or size. From the above definitions, there is a clear distinction between a vegetable and a tree. Item 12 specifically refers to vegetables not trees. A tree is not a vegetable hence, the natural tree sap which is tapped from specific species of tree is not a vegetable juice. Note that clause 3 of Schedule 2 provides that for the purposes of item 12, herbage is treated as vegetables. 'Herbage' is defined in the Macquarie Dictionary Online as: | Detailed Reasoning - herbage: noun 1. Non-woody vegetation. 2. The succulent parts (leaves and stems) of herbaceous plants. 3. Vegetation grazed by animals; pasturage. The particular species of trees do not meet the definition of herbage and therefore, clause 3 does not act to include natural tree sap under the coverage of item 12. Based on the ingredients lists you provided, the product does not contain more than 90% by volume of juices of fruits or vegetables. Hence, the requirement in item 12 is not satisfied and the exclusion at paragraph 38-3(1)(d) of the GST Act applies. Therefore, the supply of the product is not GST-free under section 38-2 of the GST Act. The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Relevant facts: You are registered for GST. You are planning to import a product that contains natural tree juice (the product). | The natural tree juice is the liquid phase extracted from a particular species of trees. It is directly tapped from the vessels found in the trunk of mature plants. It is a refreshing, clear liquid, often slightly sweet. It is commonly known for its detoxifying, diuretic, cleansing and purifying properties and may also be used to treat various illnesses and diseases. | The product label is currently under development converting from the foreign language to English to comply with Australian requirements. | The product comes in a number of flavours and the ingredients are as follows: | Natural tree sap over 90%, fruit juices, food acid, antioxidant. | Also, the future recipes may vary, all be it slightly, whilst maintaining the over 90% juice content. | The product is a shelf stable ambient storage product, requiring subsequent chilling before consumption. | The product will be sold through supermarket channels. | You provided a paper written on this particular natural tree juice which concludes that the natural tree juice fits within the definition of vegetable juice.