Private ruling: Beans
Published: December 2014

Ruling: Q2: Is the importation of the beans a non-taxable importation? Advice Yes

Relevant facts and circumstances: • You are registered for goods and service tax (GST). • You imported beans into Australia for home consumption. • The beans have been processed as food for human consumption. The product is raw beans. • The beans are imported as dried beans for cooking. • The beans have been prepared as food ingredients for cooking.


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 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 is defined in section 38-4 of the GST Act to include • food for human consumption (whether or not requiring processing or treatment) (paragraph • 38-4(1)(a) of the GST Act). • ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act) • However, the following are excluded from the meaning of food in section 38-4 of the GST Act: • Live animals (other than crustaceans or molluscs); • Unprocessed cow's milk; • Any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition; or • Plants under cultivation that can be consumed (without being subject to further process or treatment) as food for human consumption In this case, the beans are prepared for cooking and they are not suitable for replanting or cultivation. The beans do not fall into any of the exclusions in section 38-4 of the GST Act and therefore satisfy the meaning of food. | Detailed Reasoning - Section 38-3 of the GST Act: 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) or food 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 (Item 16) specifies seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way. The beans have been prepared as an ingredient for cooking. They are not food listed in item 16 as they have not been processed or treated by salting, spicing, smoking or roasting, or in any other similar way to food listed in item 16. The beans are raw. In addition, the beans are not food listed in item 8 of Schedule 1 (item 8) as the beans are not supplied as an ingredient for confectionery. Therefore, the beans are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. The supply of the beans is GST-free under section 38-2 of the GST Act. | Detailed Reasoning - Is the importation of the beans a non-taxable importation?: Under paragraph 13-10(b) of the GST Act, an importation is a non-taxable importation if, had the importation been a supply, the supply would have been GST-free or input taxed. The Australian Taxation Office (ATO) view on non-taxable importation under paragraph 13-10(b) of the GST Act is outlined in Goods and Service Tax Ruling GSTR 2003/15. Paragraphs 250 to 251 of GSTR 2003/15 outline the conditions for non-taxable importations of goods under paragraph 13-10(b) of the GST Act. The paragraphs state: 250. An importation of goods that would have been GST-free or input taxed, if it were a supply, is a non-taxable importation. For example, the supply of a wheelchair is GST-free, therefore, an importation of a wheelchair is a non-taxable importation. 251. In determining whether an importation, if it had been a supply, would have been GST-free or input taxed, the Commissioner considers that you need to hypothesise that the importation were a supply to the importer. If this hypothetical supply to the importer would have satisfied one of the exemptions in Chapter 3 of the Act, the importation is non-taxable. Therefore, as the supply of the beans is GST free under section 38-2 of the GST Act, the importation of the dried cocoa beans is a non-taxable importation under paragraph 13-10(b) of the GST Act.

Question 1: Is the supply of the beans GST-free?