Private ruling: Nutritional beverage
Published: December 2013

Ruling: Q1: Is the importation of the nutritional beverage powder taxable? Advice Yes



Reasons for decision: Summary: Section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states: You make a taxable importation if: (a) goods are imported; and (b) you enter the goods for home consumption (within the meaning of the Customs Act 1901). However, the importation is not a taxable importation to the extent that it is a *non-taxable importation. * is a defined term in the GST Act. Section 13-5 of the GST Act provides that the importation of goods into Australia is a taxable importation if they are entered for home consumption within the meaning of the Customs Act 1901. The exception to this rule is when the importation is a non-taxable importation. The meaning of "non-taxable importation" is outlined in section 13-10 of the GST Act and it states: An importation is a non-taxable importation if: (a) it is a non-taxable importation under Part 3-2; or (b) it would have been a supply that was *GST-free or *input taxed if it had been a supply. The relevant section that may apply to the importation of the nutritional beverage powder is paragraph 13-10(b) of the GST Act. The paragraph provides that an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed. The Australian Taxation Office (ATO) view on non-taxable importation under paragraph 13-10(b) of the GST Act is outlined in Goods and Service Tax Ruling GSTR 2003/15 which is a ruling on importation of goods into Australia. Paragraphs 250 to 251 of GSTR 2003/15 outline the conditions for non-taxable importations of goods under paragraph 13-10(b) of the GST Act. The paragraphs state: 250. An importation of goods that would have been GST-free or input taxed, if it were a supply, is a non-taxable importation. For example, the supply of a wheelchair is GST-free, therefore, an importation of a wheelchair is a non-taxable importation. 251. In determining whether an importation, if it had been a supply, would have been GST-free or input taxed, the Commissioner considers that you need to hypothesise that the importation were a supply to the importer. If this hypothetical supply to the importer would have satisfied one of the exemptions in Chapter 3 of the Act, the importation is non-taxable. Therefore, if a supply of goods is GST free or input taxed in Australia, then the importation of the goods will be a non-taxable importation under paragraph 13-10(b) of the GST Act. Otherwise the importation is taxable under section 13-5 of the GST Act. Now, we need to consider whether a supply of nutritional beverage powder in Australia is GST-free under the GST Act. | Detailed Reasoning - Nutritional beverage powder: A supply of food is GST-free under section 38-2 of the GST Act provided that the supply does not come within any of the exclusions listed in section 38-3 of the GST Act. Food is defined in paragraphs 38-4(1)(c) and 38-4(1)(d) of the GST Act to include beverages for human consumption and ingredients for beverages for human consumption. The nutritional beverage satisfies the definition of food as they are ingredients for a beverage for human consumption. However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or an ingredient for a beverage is not GST-free unless it is of a kind listed in the table in clause 1 of Schedule 2 of the GST Act (Schedule 2). The nutritional beverage has been promoted as health supplement powder, to be added and mixed with milk, juices or water to produce a nutritional drink. The nutritional beverage powder is not an ingredient for a beverage that is listed in Schedule 2. However, as you have advised that the powder could be added and mixed with milk to make a milk beverage, we need to consider whether the nutritional beverage powder could be a dry preparation marketed for the purpose of flavouring milk under item 9 of Schedule 2 (Item 9). Item 9 applies to dry preparations marketed for the purpose of flavouring milk. Issue 35 of the GST Food Industry Partnership Issues Register (Issue 35) provides guidance in determining whether a product is for the purpose of flavouring milk and therefore listed under item 9. It states: Item 9 of schedule 2 (item 9) applies to dry preparations marketed for the purpose of flavouring milk. Products that are added to water and that are marketed principally as chocolate or cocoa-based drinking preparations, and not for the purpose of flavouring milk, do not satisfy the requirements of item 9. Therefore, the products listed under item 9 are dry preparations that are specifically marketed for flavouring milk. Where a product is marketed for other purposes than flavouring milk, for example a chocolate drinking preparation, the product will not be listed under item 9. The nutritional beverage powder has been promoted as a health supplement and not as a dry preparation specifically for flavouring milk. The nutritional beverage powder is not listed under item 9. Therefore, the nutritional beverage powder is not a beverage or ingredient for beverages that is listed in Schedule 2 and is excluded from being GST-free by paragraph 38-3(1)(d) of the GST Act. The importation of the nutritional beverage powder is taxable under section 13-5 of the GST Act. 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 import a nutritional beverage into Australia for home use | · The imported nutritional beverage is in powder form. | · The nutritional beverage powder contains vitamins, minerals, protein, omega-3, antioxidants and dietary supplements. | · The beverage is prepared by adding and mixing the nutritional beverage powder with water, juice or dairy beverage. | · You have advised that nutritional beverage powder can also be mixed with milk to produce a healthy milk drink. | · The nutritional beverage is promoted as health supplement powder, to be added and mixed with milk, juices or water to produce a nutritional drink