Private ruling: Goods and services tax (GST) and imported foreign food products
Date of advice: 1 June 2017
Published: October 2017

Ruling: Q1: Is GST payable on your sale of your foreign food products (FFP)? | A1: No. | Q2: Is GST payable on your importation of FFP? | A2: No.

Relevant facts and circumstances: You are not registered for GST. You import FFP into Australia and sell it to stores in Australia. You provided a photo of your product: FFP is imported to Australia in vacuum bags. Each pack weighs about X grams. Each FFP weighs between Y to Z grams and is normally in a bowl shape or flat. Your FFP contains X% the dry product and Y% pure water. The labelling of your FFP product provides your product’s brand name and manufacture and ingredient details. You market the FFP for human consumption. Your import permit from the Department of Agriculture and Water Resources classifies your FFP as food items for human consumption. Foreign food stores which also sell other products would sell FFP to the end consumer. FFP is normally used as an ingredient for soups. Your FFP cannot be eaten straight out of the packet. FFP needs to be cooked with rock sugar and water and boiled before it can be consumed by the consumer. Most consumers know how to cook your product, however advice will be provided to consumers on sale. FFP is not normally eaten as a food supplement and you do not market your FFP product as a food supplement. You do not market your FFP as a medicine. Your marketing does not make any specific health claims about your product. The packaging does not recommend a certain specified dose of the product.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | 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 Section 13-5 | A New Tax System (Goods and Services Tax) Act 1999 Section 13-10

Reasons for decision: Summary: Your sales of FFP are GST-free sales of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). | Detailed Reasoning - Detailed reasoning: GST is payable on your taxable supplies. You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (*Denotes a term defined in the GST Act) The indirect tax zone is Australia. You meet the requirements of paragraphs 9-5(a) to 9-5(c) of the GST Act. This is because: ● you supply FFP for consideration ● you supply the product in the course or furtherance of an enterprise that you carry on, and ● the supplies are connected with Australia. You are not registered for GST. There are no provisions of the GST Act under which your sales of FFP would be input taxed. Therefore, what remains to be determined is whether your sales of the product are GST-free and whether you are required to be registered for GST. | Detailed Reasoning - GST-free supplies of food: 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 GST Act. Food includes ingredients for food for human consumption (in accordance with paragraph 38-4(1)(b) of the GST Act. Food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind is excluded from being GST-free under section 38-2 of the GST Act (in accordance with paragraph 38-3(1)(c) of the GST Act). There are a number of other exclusions. You market the FFP for human consumption. The labelling of your FFP provides your product brand name, manufacture and ingredient details. The ingredients of your product are X% the dry product and Y% water. FFP is normally used as an ingredient for soups. FFP needs to be cooked with rock sugar and water and boiled before it can be consumed. It cannot be eaten directly out of the packet. Most consumers know how to the product, however advice will be provided to consumers on sale. Your product is an ingredient for food for human consumption. Therefore, it is food under paragraph 38-4(1)(b) of the GST Act. It is not food of a kind listed in Schedule 1 or food that is a combination of one or more food at least one of which is food of such as kind. Hence, the exclusion at paragraph 38-3(1)(c) does not apply. None of the other exclusions in section 38-3 of the GST Act apply. Therefore, your sale of FFP is GST-free under section 38-2 of the GST Act. Hence, your sale of FFP is not subject to GST and will not be subject to GST even if at some stage in the future you are registered or required to be registered for GST. | Detailed Reasoning - Additional information: For guidance on determining whether an entity is required to be registered for GST, see Goods and Services Tax Ruling GSTR 2001/7 (type in GSTR 2001/7 into an internet search engine). | Detailed Reasoning - Question 2: In accordance with subsection 13-5(1) and section 13-10 of the GST Act, as the sale of FFP is GST-free, the importation of FFP is not a taxable importation for GST purposes. Therefore, no GST should be imposed on the importation of FFP. You cannot recover amounts the Department of Immigration and Border Protection (DIBP) charged you for 'GST’ on past importations of FFP by reporting these amount at label 1A (the input tax credit label) of a BAS, as the importations were not taxable importations for GST purposes, even though you did not indicate to DIBP in the customs clearance documents that a GST exemption applied. There is no mechanism for you to recover those amounts from the Australian Taxation Office. Please seek advice from DIBP on whether and how you can obtain a refund from that Department of the amounts you incorrectly paid as GST on the past importations. Record the GST exemption code 'FOOD’ in Entry For Home Consumption documents you provide to DIBP in respect of future importations of FFP so that GST is not imposed in future.