Private ruling: GST food and food packaging
Date of advice: 29 May 2026
Published: 17 August 2026
Ruling period: From a specified date to a specified date
Date scheme commenced: A specified date

Ruling: Q1: Is the importation of the specified products (the Products) a non-taxable importation under section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. The importation is partly a taxable importation and partly a non-taxable importation. | Q2: Is the sale of the Products GST-free under section 38-2 of the GST Act? | A2: No. The sale is partly a taxable supply and partly a GST-free supply.

Relevant facts and circumstances: You are registered for GST. You intend to import the Products into Australia and sell them in Australia. The Products are tea preparations. You provided images of the packaging of the Products and details of their contents. The packaging of the Products serves other purposes and enhances the branding and appearance of the Products. The packaging of the Products is, in substance, in the nature of gift boxes and goes beyond what would ordinarily be regarded as normal packaging for tea preparations. The packaging of the Products indicates that they are intended to be presented as gift items, with attractive packaging that enhances the perceived value of their contents. You provided details of certain costs associated with the Products, including the packaging cost and the total price paid to the overseas manufacturer for the Products. The total price paid to the manufacturer for the Products includes the cost of their packaging. The packaging cost is not charged at a separate price.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-80 | A New Tax System (Goods and Services Tax) Act 1999 section 13-5 | A New Tax System (Goods and Services Tax) Act 1999 section 13-10 | A New Tax System (Goods and Services Tax) Act 1999 section 13-25 | 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 section 38-6 | A New Tax System (Goods and Services Tax) Act 1999 item 5, Scheule 2

Reasons for decision: Detailed Reasoning - Question 1: Is the importation of the Products a non-taxable importation under section 13-10 of the GST Act? | Summary: The importation of the Products is partly a taxable importation and partly a non-taxable importation. The portion attributable to the tea preparations is a non-taxable importation under section 13-10 of the GST Act, whereas the portion attributable to the packaging constitutes a taxable importation under section 13-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: GST is payable on taxable importations. Section 13-5 of the GST Act provides that an importation is a taxable importation if the following requirements are met: • the goods are imported, and • the entry of the goods is for home consumption. However, the importation is not a taxable importation to the extent that it is a non-taxable importation. The term 'home consumption' has the meaning within the Custom Act 1901 and in broad terms, means for consumption, use or application in Australia. No GST is payable on an importation that is a non-taxable importation. Section 13-10 of the GST Act provides that an importation is a non-taxable importation if: • it is a non-taxable importation under Part 3-2 of the GST Act, or • it would have been a supply that was GST-free or input taxed had it been a supply. The importation of the Products is not wholly a non-taxable importation, as, had the importation been a supply, it would have been partly taxable and partly GST-free. This is because the supply of the tea preparations is GST-free; however, the packaging is not of a kind in which food of that kind is normally supplied. This is further explained in the Reasons for Decision for Question 2. As the importation of the Products is partly a taxable importation and partly a non-taxable importation, the value of the importation is worked out in accordance with section 13-25 of the GST Act. That is, the value of the taxable importation is the proportion of the total value of the importation that the taxable component represents. | Detailed Reasoning - Question 2: Is the sale of the Products GST-free under section 38-2 of the GST Act? | Summary: The sale of the Products is partly taxable and partly GST-free. The portion attributable to the tea preparations is GST-free under section 38-2 of the GST Act, whereas the portion attributable to the packaging constitutes a taxable supply under section 9-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: 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. 'Food' is defined in section 38-4 of the GST Act to include ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act). The Products contain tea preparations for human consumption. The tea preparations satisfy the definition of food in paragraph 38-4(d) of the GST Act. However, pursuant to paragraph 38-3(1)(d) of the GST Act, a beverage or an ingredient for a beverage is not GST-free unless it is of a kind of a beverage or an ingredient that is specified in Schedule 2 to the GST Act (Schedule 2). Item 5 in Schedule 2 to the GST Act specifies that 'tea (including herbal tea, fruit tea, ginseng tea and other similar *beverage preparations)' is GST-free. Accordingly, the supply of the tea preparations is GST-free under section 38-2 of the GST Act. GST treatment of packaging in which GST-free food is supplied Subsection 38-6(1) of the GST Act provides that a supply of the packaging in which food is supplied is GST-free if the supply of the food is GST-free. However, subsection 38-6(2) of the GST Act provides that the supply of the packaging is GST-free under section 38-6 only to the extent that the packaging is: (a) necessary for the supply of the GST-free food, and (b) of a kind in which food of that kind is normally supplied. Goods and Services Tax Determination GSTD 2000/6 Goods and services tax: when is the supply of food packaging GST-free in terms of section 38-6 of the A New Tax System (Goods and Services Tax) Act 1999? (GSTD 2000/6) explains the circumstances where a supply of packaging in which GST-free food is supplied is also GST-free under section 38-6 of the GST Act. Paragraph 2 of GSTD 2000/6 states: Where the purpose of the packaging is simply to contain, protect and promote the food within, it will be a normal and necessary part of the supply of the food. For individual items, normal and necessary packaging includes tins, bottles, jars and boxes. For a group of items, normal and necessary packaging includes the carton or box that contains a number of individual items. It is accepted that some level of packaging is necessary to contain tea preparations. Typical packaging for tea preparations involves placing the tea preparations in a light, thin cardboard box or pouch. The packaging of the Products serves other purposes and enhances the branding and appearance of the Products. We consider that the packaging of the Products is, in substance, in the nature of gift boxes and goes beyond what would ordinarily be regarded as normal packaging for tea preparations. It is evident that the Products are intended to be presented as gift items, with attractive packaging that enhances the perceived value of their contents. Accordingly, we consider that the packaging of the Products, in which the tea preparations are presented, is not of a kind in which tea preparations are normally supplied for the purposes of section 38-6 of the GST Act. Where the packaging of a GST-free food is not normal and necessary, the packaging component of the supply is taxable. As such, the supply of the Products is partly taxable and partly GST-free. The portion attributable to the tea preparations is GST-free under section 38-4 of the GST Act, whereas the portion attributable to the packaging constitutes a taxable supply under section 9-5 of the GST Act. De minimis rule for mixed supplies GSTD 2000/6 provides a de minimis rule in paragraph 6 and 7 where it states: 6. ..., a de minimis rule will be adopted in circumstances where GST-free food is contained in packaging that might not otherwise be considered normal and necessary. If the cost price of such packaging is relatively low and is below the de minimis threshold, we will accept that the packaging is normal and necessary and the supply of the packaging is GST-free. Note that the de minimis rule only applies to packaging in which food is contained. Promotional items accompanying the food and packaging, and items that are usually supplied separately, are not covered by the de minimis rule. 7. The de minimis rule will apply when packaging of GST-free food is not charged at a separate price and the cost price of the packaging is the lesser of: • $3 (excluding GST); or • 20% of the wholesale value of the total supply. Paragraph 9 of GSTD 2000/6 states: Where the packaging is clearly designed as more than normal and necessary to the supply of food and it fails to satisfy the de minimis rule, or where promotional items accompany the food and packaging, there is a mixed supply. The total price must be apportioned under section 9-80 of the A New Tax System (Goods and Services Tax) Act 1999 between the taxable and GST-free components to calculate the amount of GST due. Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: Apportioning consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) among other things, provides methods and examples for apportioning the total price of a supply that contains separately identifiable taxable and non-taxable parts. Paragraph 21 of GSTR 2001/8 sets out a de minimis rule, calculated differently from that in GSTD 2000/6, and states: You may choose to treat something (or things taken together) as integral, ancillary or incidental if the consideration that would be apportioned to it (if it were a separately identifiable part of a mixed supply) does not exceed the lesser of: • $3.00; or • 20% of the consideration for the total supply. Paragraph 5 of GSTR 2001/8 further states: This Ruling also applies to the valuation of the separate parts of a mixed supply that includes food. Goods and Services Tax Determination GSTD 2000/6 explains the circumstances where a supply of food packaging is GST-free. If both the rule stated in paragraph 7 of Goods and Services Tax Determination GSTD 2000/6 and the approach given in paragraph 21 of this Ruling apply to a supply that you make, then you may choose either approach. In your case, the packaging cost is not charged as a separate price. However, having regard to the cost of the packaging and total price paid to the overseas manufacturer, we consider that the de minimis rule is not satisfied in relation to either the importation or the subsequent sale of the Products in Australia. This is because the portion of the value reasonably attributable to the packaging on importation, and the portion of the consideration reasonably attributable to the packaging on sale, exceeds the lesser of $3.00 or 20% of the wholesale value of the total supply, or 20% of the consideration for the total supply. By way of example, applying the de minimis rule in GSTD 2000/6 to the wholesale value of the Advent Calendar supplied by the overseas manufacturer, the portion of cost attributable to packaging would be calculated on a proportional basis as follows: • Total wholesale value: $X • 20% or the wholesale value ($X × 20%): $Y • Packaging cost: $Z (in this case, less than $3.00 but not less than 20% or the wholesale value) The relevant de minimis threshold is the lesser amount, being $Y. As the packaging cost of $Z exceeds 20% of the wholesale value, the de minimis rule does not apply to the Products. The packaging component must therefore be separately recognised for GST purposes, rather than treated as incidental to the supply of the tea preparations. This is the case notwithstanding that the packaging is not charged at a separate price. Similarly, the de minimis rule does not apply to the Products where their packaging cost exceeds $3.00 . Apportioning the importation value and consideration between taxable and non-taxable components As the packaging of the Products exceeds what is considered normal for the supply of tea preparations, the importation of the Products is partly a taxable importation and partly a non-taxable importation. Accordingly, you are liable to pay GST on the portion of the importation value attributable to the packaging. Similarly, the sale of the Products in Australia is partly taxable and partly GST-free. You are therefore liable to pay GST on the portion of the consideration attributable to the packaging. You are required to apportion the value of the importation of the Products between the taxable and non-taxable importation parts in accordance with section 13-25 of the GST Act, and apportion the consideration for the sale of the Products between the taxable and GST-free parts in accordance with section 9-80 of the GST Act. Paragraph 26 of GSTR 2001/8 states: Apportionment must be undertaken as a matter of practical commonsense. You can use any reasonable basis to apportion the consideration. Depending on the facts and circumstances of the supply, a direct or indirect method may be an appropriate basis upon which to apportion the consideration and ascertain the value of the taxable part of the supply. The basis you choose must be supportable in the particular circumstances. GSTR 2001/8 provides guidance, including methods and examples, to assist in determining how to apportion the consideration for a supply that contains separately identifiable taxable and non-taxable components. As stated at paragraph 27 of GSTR 2001/8, you must retain records showing the basis on which the importation value and consideration are apportioned between the taxable and non-taxable components of the importation and supply of the Products.