Private ruling: GST and food product
Published: October 2013

Ruling: Q1: Is the supply of the product GST-free? | A1: 

Relevant facts and circumstances: · You are registered for goods and services tax (GST). · You supply the product. · The product is a food product. · The product is made from processed cereal, flour and sugar. · The taste, size and texture of the product makes it an ideal breakfast cereal or an addition to other breakfast cereals. · You are selling the product mainly through retail outlets. · You are importing the product as a non-taxable importation.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act): Section 13-10 | Section 38-2 | Section 38-3 | Section 38-4 | Paragraph 38-4(1)(a) | Paragraph 38-4(1)(b) | Paragraph 38-4(1)(c) | Paragraph 38-3(1)(d) | Paragraph 38-4(1)(e) | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2 clause 1

Reasons for decision: Summary: The only provision in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) that may allow your supply of the product to be GST-free is as a supply of food which is GST-free under section 38-2 of the GST Act. The food, however, must not come within any of the exclusions listed in section 38-3 of the GST Act 'Food' is defined in section 38-4 of the Act to include: (a) food for human consumption (whether or not requiring further processing or treatment); (b) ingredients for food for human consumption; (c) *beverages for human consumption; (d) ingredients for beverages for human consumption; (e) goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents for flavourings);… (* denotes a defined term under section 195-1 of the GST Act) Further, paragraph 38-4(1)(h) of the GST Act provides that 'food' does not include 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. From the information provided, your product is made from processed cereal, flour and sugar that can be added to breakfast cereals or muesli or can be eaten on its own. The product is marketed as food for humans and sold in retail outlets. Hence, your product is considered food for human consumption, and is not excluded by paragraph 38-4(1)(h) of the GST Act. Accordingly, the product satisfies the definition of food in section 38-4 of the GST Act. Section 38-3 of the GST Act covers food that is not GST-free. 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act. There are no items that are of relevance to your product in clause 1 of Schedule 1 to the GST Act. Your supply of the product does not fall within any of the other exclusions in section 38-3 of the GST Act. The ingredients of the product and the taste and texture of the product is akin to cereal and is quite dry in texture. Taking all factors into account, the product is not considered to be food of a kind specified in the table in clause 1 of Schedule 1 and does not fall within any of the other exclusions in section 38-3 of the GST Act. Accordingly, as the product satisfies the definition of food and is not excluded from being GST-free, your supply of the product is a GST-free supply of food under section 38-2 of the GST Act. Furthermore, breakfast cereals and breakfast food consisting principally of compressed, rolled or flattened cereal, are GST-free as listed on the Detailed Food List. Non taxable importation Please note that 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 if it had been a supply (for example, it would be a GST-free supply had the supply been made in Australia). In your case, your supply of the product in Australia will be GST-free and consequently, your importation will be non-taxable under section 13-10 of the GST Act.