Private ruling: Food product
Published: November 2013

Ruling: Q1: Is the supply of the food product GST free? Advice Yes

Relevant facts and circumstances: · You are registered for the goods and services tax (GST). · You supply a food product (product). . · The product is produced by removing the moisture from fruits. The products retain their fruit flavour and colour. · The product is made from fruits cut into large sheets and then cut into strips, to form the product. The texture is a firm product. · The ingredients for the product are natural fruits. · The packaging states the product contains all natural flavours and colours. · You advise that no sugar has been added in the manufacturing of the product. · The packaging promotes the product as snacks. The product is chewy with fruity taste. · The products are displayed at the dried fruit section.


Reasons for decision: Summary: 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. Section 38-4 of the GST Act provides the meaning of the word 'food' and it includes, amongst other things, food for human consumption. The products satisfy the definition of food under section 38-4 of the GST Act as they are foods for human consumption. However, subsection 38-3(1) of the GST Act specifies some foods that are excluded from being GST-free. The subsection states: A supply is not GST-free under section 38-2 if it is a supply of: (a) *food for consumption on the *premises from which it is supplied; or (b) hot food for consumption away from those premises; or (c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or (d) a *beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2; or (e) food of a kind specified in regulations made for the purposes of this subsection. * denotes a defined term in the GST Act Based on the information provided, we consider that paragraph 38-3(1)(c ) of the GST Act may be applicable to the product. They are retailed as fruit snack sticks. Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is 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. The relevant item in Schedule 1 for the fruit stick is item 8 of Schedule 1 (Item 8). The fruit stick is not food of a kind listed under items 11 and 12 of Schedule 1. Item 11 of Schedule 1 (item 11) is about foods known muesli bars or health food bars. As the texture is a firm fruit stick and are not in a bar form, they are not food of a kind listed under item11. Item 12 of Schedule 1 (item 12) is about crystallised fruits, glace fruit and drained fruits. The fruit sticks are not crystallised, glaced or drained fruits. The fruit sticks are prepared by reducing moisture in the fruits. The fruit stick is not food of a kind listed under item 12. Item 8 Item 8 lists confectionery, food marketed as confectionery, food marketed as ingredients for confectionery or food consisting principally of confectionery. This is explained in paragraph 1.45 of the Further Supplementary Explanatory Memorandum to the GST Bill, which states: "Confectionery includes food that is marketed as confectionery, such as chocolate, boiled sweets, lollipops, sherbet, marshmallow and fruit lollies, as well as the specific types of goods included in Schedule 1." There are a number of court cases which can assist in determining whether a product is confectionery. For example Aickin J in the High Court decision Landau and Anor. v Goldwater and Anor. 13 ALR 192 gave a general description of confectionery: "one of common usage which embraces a wide variety of articles, many readily recognisable as examples of confectionery. They are primarily small articles of a sweet character containing substantial amounts of sugar and regarded as being in the nature of a delicacy in whatever quantity they may be consumed. There is, however, no doubt that in the ordinary parlance the term would now include blocks of chocolate, however small or however large." Therefore, a confectionery is generally food that is sweet in character and delicacy. They contain substantial amounts of sugar. Issue 12 of the GST Food Industry Partnership Issues Register (Issue 12) provides further guidance in determining whether a product is a confectionery. It states that the activities of the seller are relevant in determining whether a food is marketed as a "confectionery" or "ingredients for confectionery". Issue 12 list the following consideration: · the name of the goods · the price of the goods · the labelling on any containers for the goods · literature or instructions packed with the goods · how the goods are packaged · how the goods are promoted or advertised; and · how the goods are distributed. You advised that no sugar has been added in the manufacturing of the product. The ingredients for the product are natural fruits. The packaging also claims that the product contains all natural flavours and colours. The texture is a firm product. The packaging promotes the product as a snack product. The product is chewy with fruity taste. The product is displayed at the dried fruit section. Based on the above information, we consider that the product is not a confectionery food listed under item 8. Although the product may contain some naturally occurring sugar (from the fruits), it has been promoted as a snack and are displayed at the dried fruit section, along with other similar products such as fruit leather and dried fruits. The sweetness (sugar content) in the product is derived from the naturally occurring sugar in the fruits and are not added (during the manufacturing process) to make the product sweet in character and as a delicacy. Please note : The "Goods and Services Tax Industry issues- Details Food List" ruling provides that fruit leather/strip (100% fruit) is GST-free as it is food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. As the product is not food of a kind listed in Schedule 1, they are therefore not excluded from being GST-free by subsection 38-3 of the GST Act. The supply of the product is GST-free under section 38-2 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.