Private ruling: GST treatment of blanched peanuts
Published: November 2011

Ruling: Q1: Are blanched peanuts GST-free? | A1: Yes.

Relevant facts and circumstances: You are registered for GST. Your product has been described as blanched peanuts. The product is subject to the following processes: § Raw material receipt and inspection § Grading § Cleaning § Roasting (temperature 175 degrees, duration 45 minutes) § Cooling (waiting for two days until the temperature of the peanut comes down to 40 degrees) § Machine blanching § Colour sorting § Quality inspection § Weighting and packing § Loading on pallets & storing in cool/dry warehouse. You have advised that the products are not for consumption in this state. They require further processing (roasting and flavouring) before they can be made available for human consumption. You are a wholesaler and will supply the goods for further manufacture.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-A | Schedule 1 | Section 7-1

Reasons for decision: Summary: Blanched peanuts are GST-free. Blanched peanuts are a food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. | Detailed Reasoning - Detailed reasoning: Section 7-1 of the GST Act provides that GST is payable on goods that are imported and entered for home consumption under the Customs Act 1901 . However, a supply of food is generally GST-free. Section 38-2 of the A New Tax System (Goods and services Tax) Act 1999 (GST Act) provides that a supply of food is GST-free. The term 'food' is defined in section 38-4 of the GST Act as follows: (1) Food means any of these or a combination of any of these: (a) food for human consumption (whether or not requiring processing or treatment); (b) ingredients for food for human consumption; … (f) goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings) … However, section 38-3 of the GST Act provides that certain supplies of food will not be GST-free, in particular foods of a kind specified in the third column of the table in clause 1 of Schedule 1 (or food of a kind that is a combination of one or more foods at least one of which is food of such a kind). Item 16 of Schedule 1 specifies that seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way are specified as being a food that is not GST-free. Blanched peanuts that are only lightly roasted will be GST-free as they are not considered to fall within Item 16. While blanched peanuts are roasted for a short time, this is purely because heating the peanuts is necessary to remove their skin and to ensure that they can be safely stored. This process is distinct from the process that occurs in the case of roasted peanuts. Roasted peanuts are cooked right through, and are normally roasted at higher temperatures. You have advised that these blanched peanuts are not intended or suitable for consumption in their current state. They require further processing (roasting and flavouring) before they can be made available for human consumption. Therefore, considering this information, blanched peanuts are not considered to be food of a kind specified in the Schedule. Therefore, this product will be GST-free. This is confirmed in the detailed food list, which is available on our website and provides details of the GST status of major food and beverage product lines. This publication has the status of a public ruling. Blanched and raw peanuts are described in this publication as food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. However, it is important to note that once these blanched peanuts have been subjected to further roasting such that they are fit for human consumption they will no longer be GST-free. They will be considered to fall within Item 16 of Schedule 1. If, contrary to the information provided, the goods are to be sold for human consumption without this further processing we would consider that they do then come within Item 16 of Schedule 1. This is because this then demonstrates that the roasting that they have been subjected to is sufficient treatment or processing to have brought them within Item 16.

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