Private ruling: GST and supply of food

Ruling: Q1: Is the supply of your food product GST-free? | A1: No, the supply of your food product is not GST-free. The supply is taxable.

Relevant facts and circumstances: You are an importer and distributor of dried fruit throughout retailers in Australia. You are registered for goods and services tax (GST). You are selling a product that is a mix of dried fruits, beans, seeds and nuts (your product). The beans are roasted and spices added. The nuts and seeds are lightly roasted. Your product is sold in the dried fruit section of supermarkets in a resealable plastic pack.


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) unless the supply is 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). The product is food for human consumption and, therefore, satisfies the definition of food in section 38-4 of the GST Act. However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is a supply of food of a kind specified in the third column of 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. The term 'food that is a combination of one or more foods' is not defined in the GST Act. However, the examples given in the Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (the EM) indicate that the term refers to a combination of foods that are supplied in a single package and are not separated by their individual packaging. The EM further explains that the exclusion in paragraph 38-3(1)(c) of the GST Act would not apply where a mix of individually packaged goods are packed and sold together; for example, a hamper containing a packet of biscuits, box of chocolates and a jar of coffee. This type of supply is not a combination of food because each food is individually packaged; they are not combined. Your product is a combination of dried fruits, beans, seeds and nuts. The dried fruits, beans, seeds and nuts are combined and sold in a resealable plastic pack rather than sold together in their individual packages. Therefore, it needs to be determined whether any of these is a food of a kind specified in Schedule 1. Item 12 of Schedule 1 (item 12) lists crystallised fruit, glace fruit and drained fruit. The dried fruits in your product are not fruit products described in item 12 and are therefore not covered by that item. Item 16 of Schedule 1 (item 16) lists seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way. You advised that the beans are roasted and spices added; while the nuts and seeds are lightly roasted. As such, the beans, seeds, and nuts included in your product are covered by item 16. Your product is a combination of one or more foods at least one of which is a food of a kind specified in Schedule 1. Accordingly, your product is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. Section 9-5 of the GST Act provides that you make a taxable supply if: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with Australia; and (d) you are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. All the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act above are met when you supply your product. Furthermore, the supply of the product is not GST-free nor input taxed under any of the provisions of the GST Act. Therefore, the supply of your product is a taxable supply.

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