Private ruling: GST and food
Date of advice: 9 July 2019
Published: October 2019

Ruling: Q1: Is the supply of the listed spices (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. | Q2: Is the importation of the Products a non-taxable importation under paragraph 13-10(b) of the GST Act? | A2: Yes.

Relevant facts and circumstances: You imports and sells the listed spices (the Products) which include roasted seeds and pulses. The Products are imported in retail quantities as shown in the product list and store pictures. The seeds and pulses are purchased from farmers in raw form and received in the storage facility where the quality assurance team inspects and sorts the products. They are then taken to another facility where the seeds are passed through a sieve three times to ensure no foreign particles are found. They are taken to the roasting facility where the seeds and pulses are roasted at very high temperature (temperature and duration of roasting varies from seed to seed). After roasting, the seeds and pulses are moved to the packing facility where they are packed in various sizes. They are sold powdered, crushed or whole. The spices are packed in bright coloured packets. These Products are used in preparing food items such as curries and rice dishes. Generally, consumers roast whole spices to enhance the flavour of the spices. You offer your customers a pre-roasted product to save time and cost. However, the Products still need to be further processed/cooked to consume. The Products are not consumed straight out of the packet as a snack or finished good. You provided the product list of the spices bright coloured packet. You provided a picture of a product in a fluoro coloured packet. The roasted seed is used as a thickener to make chutneys such as date and tamarind chutney, coriander chutney, coconut and garlic chutney, etc. The Products are sold in retail outlets, restaurants and food manufacturers. You provided a picture of a retail store display.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 13-5 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 13-10(b) | 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 paragraph 38-4(1)(e) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 1

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 it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded by section 38-3 of the GST Act. The definition of food in section 38-4 of the GST Act includes goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings) under paragraph 38-4(1)(e) of the GST Act. The document Food Industry Partnership - issues register lists major issues and subsidiary questions, which have been collated as a result of consultations with the Food sector. In particular, issue 11 states (in part): Those products included in paragraph 38-4(1)(e) of the GST Act include: · condiments (for example, tomato sauce, jam, chutney) · spices (for example, pepper, cinnamon, cloves) · seasonings · sweetening agents · flavourings (for example, vanilla essence). Products that satisfy paragraph 38-4(1)(e) are used for the purpose of adding to the taste or flavour of finished foods. The Products have the essential character of the class of goods listed above as spices. Hence, the Products satisfy the definition of food in paragraph 38-4(1)(e) of the GST Act. However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). The Products are not food of a kind specified in Schedule 1. In addition, the Products do not fall within any of the other exclusion in section 38-3 of the GST Act. Therefore, the supply of the Products is GST-free under section 38-2 of the GST Act. GST is payable on all taxable importation of goods into Australia. Section 13-5 of the GST Act provides that an entity makes a taxable importation if: · goods are imported and · the entity enters the goods for home consumption within the meaning of the Customs Act 1901 . However, an importation is not a taxable importation to the extent that it is a non-taxable importation. Paragraph 13-10(b) of the GST Act provides that an importation is a non-taxable importation to the extent that, had it been a supply, the supply would have been a GST-free or input taxed supply. As discussed in Question 1 above, the supply of the Products would have been GST-free under section 38-2 of the GST Act. Therefore, the importation of the Products is a non-taxable importation under paragraph 13-10(b) of the GST Act.