Private ruling: Fruit drink
Published: November 2012

Ruling: Q2: If yes, is the importation of the fruit drink a taxable importation under section 13-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? Decision 2 No



Reasons for decision: Detailed Reasoning - 1. Is your supply of the fruit drink GST-free?: A supply of food is GST-free under section 38-2 of the GST Act, providing it does not fall within any of the exclusions listed in section 38-3 of the GST Act. Food is defined in subsection 38-4(1) of the GST Act to include, among other things, beverages and ingredients for beverages for human consumption. You have advised that the product is a fruit drink containing juices extracted from fruits. We consider that the fruit drink satisfies the definition of food as it is promoted as a fruit drink that provides nourishment and nutritional benefits (paragraph 38-4(1)(c) of the GST Act). The fruit juice does not contain any ingredients that are registered or listed medicines. | Detailed Reasoning - Beverages specified in Schedule 2: Paragraph 38-3(1)(d) of the GST Act provides that a supply of a beverage or an ingredient for a beverage is not GST-free under subsection 38-2 of the GST Act, unless it is of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). Items 10, 11 and 12 in Schedule 2 (under the category of fruit and vegetable juices) are relevant items in relation to the fruit drink. These items list beverages that are GST-free. Item 10 in Schedule 2 (Item 10) lists concentrates for making non-alcoholic beverages, if the concentrates consist of at least 90% by volume of juices of fruits as being GST-free. Item 11 in Schedule 2 (item 11) provides that non-alcoholic carbonated beverages that consist wholly of juices of fruits or vegetables are GST-free. We do not consider that the fruit drink is a beverage of a kind listed under items 10 and 11. In particular, the product is not a concentrate for making non-alcoholic beverages under item 10, because the product is intended to be consumed in its current state. The product is also not a beverage made of wholly fruit juice as the fruit drink has "added water" (7% by volume) added to the fruit drink during the manufacturing process, and therefore is not GST-free under Item 11. Item 12 in Schedule 2 (item 12) lists non-alcoholic non-carbonated beverages if they consist of a least 90% by volume of juices of fruits or vegetables as being beverages that are GST-free. You have advised that the drink is juices extracted from fruits and it contains more than 90% (by volume) of reconstituted juices of fruits. After reconstitution, the juices are brought back to their original form. Additional water (about 7% by volume) is added to dilute the juices. Therefore the fruit drink is a beverage of a kind specified in item 12 and is a beverage that is not excluded from being GST free by section 38-3 of the GST Act. The supply of the fruit drink is GST-free under section 38-2 of the GST Act. | Detailed Reasoning - 2. Is the importation of the fruit drink a non-taxable importation?: Under section 13-5 of the GST Act, an entity makes a taxable importation when it imports goods and enters them for home consumption. However, the importation is not taxable to the extent that it is a non-taxable importation. The meaning of non-taxable importation is provided in section 13-10 of the GST Act. This provides that an importation is a non-taxable importation if it would have been a GST-free supply had it been a supply. As a supply of the fruit drink is GST-free under section 38-2 of the GST Act, the importation of the fruit drink will not be a taxable importation and GST will not be payable.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Question 1: Is the supply of the fruit drink GST-free? | Relevant facts: · You are registered for goods and services tax (GST). | · You carry on an enterprise of importing fruit drink for sale. | · The fruit drink contains juices extracted from fruits. | · The fruit drink is non-alcoholic and non-carbonated. | · The fruit drink is a liquid packed in a bottle. | · The packaging label advises consumer to shake well before drinking the juice. | · The fruit drink is described as a drink for nourishment and does not claim to have any therapeutic qualities. | · The fruit juices contain more than 90% by volume of reconstituted juices of fruits and the remaining part of (less than 10% by volume) is "added water". | · The fruit drink is manufactured by crushing the fruit for its juices and it contains fruit pulp. | · The juice is made into concentrate and then reconstituted to its original pure juice form.