Private ruling: Goods and Services Tax (GST)
Published: May 2014

Ruling: Q1: Is the supply of the product GST-free? | A1: Yes.

Relevant facts and circumstances: • You are registered for the goods and services tax (GST). • You are launching a new product. • You have provided the following information concerning the product: • The product comes in powder form. • The consumer is required to add milk and stir.

Relevant legislative provisions: 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 paragraph 38-4(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(d) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(d) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause 1

Reasons for decision: Summary: 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 product is a preparation that when mixed with milk is 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). Accordingly, if the beverage product is listed in Schedule 2 it will be GST-free. When considering the GST treatment of your supply of the product, only the following item listed in Schedule 2 may be of relevance. • Item 9 of Schedule 2 - dry preparations marketed for the purpose of flavouring milk There are no other items in Schedule 2 that are appropriate for the product under consideration. In your case, the product is in powder form and the consumer is required to add it to milk and stir to make a milk drink. Therefore, we consider that the product is a beverage ingredient, as a dry preparation marketed for the purpose of flavouring milk, as listed under item 9 of Schedule 2 (item 9). The supply of the product is therefore not excluded from being GST-free under paragraph 38-1(d) of the GST Act.