Private ruling: Milk flavouring product
Published: January 2014

Ruling: Q1: Is the supply of a milk flavouring product GST free? Advice Yes



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) 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 milk flavouring product is for preparing a flavoured milk drink for human consumption. However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage or as 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). As the milk flavouring product is marketed as ingredients for preparing a flavoured milk drink, we consider that the milk flavouring product could be a beverage ingredient listed under item 9 of Schedule 2 (item 9). Ingredients for beverages listed under item 9 are 'dry preparation marketed for the purposes of flavouring milk". Milk flavouring product The milk flavouring product consists of a dried preparation of the flavouring ingredients for a milk drink. The instructions on the label advise the consumer to add the milk flavouring product into a hot milk drink for flavour. In addition, you advised that the milk flavouring product is marketed for flavouring milk drinks. The milk flavouring product is a dry preparation marketed as an ingredient for flavouring milk and is therefore an ingredient for a beverage specified under item 9. The supply of the milk flavouring product is therefore not excluded from being GST-free under paragraph 38-3(1)(d) of the GST Act.

Relevant facts: · You are registered for the goods and services tax (GST). | · You retail a milk flavouring product. | · The milk flavouring product consists of a dried preparation of flavouring ingredients packed in a bag and labelled for flavouring milk. | · The label advises the consumer to add the milk flavouring product into hot milk for flavour. | · The ingredients in the milk flavouring product consist of dried milk flavours, butter, soy powder, and emulsifier.