Private ruling: GST - supply of powdered formula
Date of advice: 1 June 2026
Published: 17 August 2026

Ruling: Q1: Is the supply of powdered formula (the Product) GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.

Relevant facts and circumstances: You are importing the Product into Australia in dry powder form (the Product). The Product is a nutritional formula made from a wide range of ingredients and developed to meet the dietary needs of children over 12 months old suffering from certain food allergies. The Product is also marketed as food for special medical purposes. The Product is not for infants and does not contain formula milk nor any other cow's milk-based constituents. The following information has been extracted from the Product label you provided: • For children aged over 12 months • Suitable for children with certain allergies • Supports healthy growth and development • Ingredients • Each serving should be prepared individually. • For special medical purposes. For advice on allergy, please consult your doctor or health worker. Not suitable for general use and should be used under medical supervision. Not to be used as a sole source of nutrition. • Specially formulated as a nutritional supplement with protein sourced from plant. • Formulated to assist toddlers with their dietary intake of energy and nutrients to support healthy growth and development. It contains XX vitamins and minerals. The Product is not available exclusively on prescription but is only available in pharmacies. This allows patients to access dietary management early under the supervision of a healthcare professional.

Relevant legislative provisions: 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 paragraph 38-3(1)(d). | A New Tax System (Goods and Services Tax) Act 1999 section 38-4. | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(c). | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2.

Reasons for decision: Summary: 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 subsection 38-4(1) of the GST Act to include: (c) beverages for human consumption; (d) ingredients for beverages for human consumption; However, under paragraph 38-3(1)(d) of the GST Act, a supply of food is not GST-free if it is a beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). The items from Schedule 2 that are of relevance are: • item 1(a) - milk, skim milk or buttermilk (whether liquid, powdered, concentrated or condensed) • item 2 - beverages consisting of products referred to in item 1 (or a combination of those products), to the extent of at least 95%, but not including flavoured beverages • item 4 - beverages consisting principally of soy milk or rice milk, but not including flavoured beverages • item 13 - beverages or ingredients for beverages, of a kind marketed as food for infants or invalids. | Detailed Reasoning - Meaning of 'beverage' for GST purposes: The term 'beverage' is merely defined in the GST Act to include water. You contend that, although the Product is in powder form and is to be mixed with water, it constitutes a beverage for the purposes of section 38-4 of the GST Act. We do not agree with this contention. As outlined above, subsection 38-4(1) of the GST Act draws a distinction between beverages and ingredients for beverages, treating them as separate categories within the definition of 'food'. Goods and Services Tax Determination GSTD 2002/2 Goods and services tax: what supplies of fruit and vegetable juices are GST-free? provides that: 5.... The word beverage appears in a similar context in the former sales tax legislation and has been considered by the courts to mean 'a drink of any kind' and, in turn, drink as 'any liquid which is swallowed to quench thirst or for nourishment'. 6. For something to be a drink, it must be a liquid to be swallowed: • to quench thirst; or • for nourishment. 7. A liquid providing nourishment will sustain life by assisting in growth or providing energy. A nutritional purpose may be contrasted with a medicinal purpose which arises where a liquid is provided for the treatment of disease or has curative or remedial properties. 8. Liquids that are consumed other than to quench thirst or for nourishment (for example, liquids consumed for medicinal purposes) do not satisfy the requirements of items 11 or 12 of Schedule 2. The Product is not a beverage, as it is not itself a drink or a liquid consumed to quench thirst or for nourishment. Accordingly, the Product does not fall within the definition of 'food' in paragraph 38-4(1)(c) of the GST Act. Rather, the Product is in powder form and is intended to be mixed with or added to a liquid to produce a drink for human consumption. The Product therefore falls within the definition of 'food' in paragraph 38-4(1)(d) of the GST Act as an ingredient for a beverage for human consumption. | Detailed Reasoning - Item 1: Goods and Services Tax Determination GSTD 2026/1 Goods and services tax: supplies of formula products (GSTD 2026/1), explains the Commissioner's view on when the supply of a formula product is GST-free under section 38-2 of the GST Act. Paragraphs 52 to 59 of GSTD 2026/1 explain our view on whether supplies of formula products are GST-free under item 1. Paragraph 56 of GSTD 2026/1 provides that the class or genus identified in item 1 comprises various products that either: • are of a kind of milk (milk, skim milk and buttermilk) in various forms (liquid, powdered, concentrated or condensed), or • can be extracted from milk (casein, whey, whey powder or whey paste). At paragraph 57, GSTD 2026/1 provides that supplies of formula products are not GST-free under item 1 because they are not of a kind of milk or powdered milk. This is because while formula products contain a high proportion of milk solids (but below 95%), they also contain additional ingredients including sweeteners and oils. While the Commissioner accepts that the term 'milk' can include products derived from both animal and plant sources, the Product cannot properly be characterised as a plant-based milk powder, as that term is ordinarily understood given its composition. Rather, the Product is a formulated powder comprising multiple ingredients, which distinguish it from a typical plant-based milk powder. Accordingly, the Product is not of a kind specified in item 1 because it is not a kind of milk or powdered milk. | Detailed Reasoning - Item 2: Paragraphs 60 to 63 of GSTD 2026/1 explain our view on whether supplies of formula products are GST-free under item 2. Paragraph 60 of GSTD 2026/1 provides that the class or genus identified in item 2 comprises beverages, other than flavoured beverages, consisting of at least 95% of the products listed in item 1. Paragraph 61 of GSTD 2026/1 further provides that powdered formula products are not of a kind of food specified in item 2 as they are not beverages. That is, they are not drinks. Accordingly, the Product is not of a kind of a beverage specified in item 2 because it is not a beverage that consists of at least 95% of the products listed in item 1. | Detailed Reasoning - Item 4: You submitted that as the Product has a plant-based milk composition, it is of a kind specified in item 4. We do not agree with this contention. The class or genus identified in item 4 comprises 'beverages consisting principally of soy milk or rice milk'. To be of a kind specified in item 4, a product must be a beverage, that is, it must be a liquid that is swallowed to quench thirst or for nourishment. Powdered formula products are not of a kind of food specified in item 4 as they are not beverages. Accordingly, the Product is not of a kind of a beverage specified in item 4. | Detailed Reasoning - Item 13: Food of a kind principally marketed for infants GSTD 2026/1explains the Commissioner's view on which formula products are GST-free under item 13 as beverages, or ingredients for beverages, of a kind marketed principally as food for infants. Paragraphs 34 to 38 of GSTD 2026/1 discuss the meaning of 'beverages and ingredients for beverages' and conclude that powdered formula products are 'ingredients for beverages'. Paragraph 22 of GSTD 2026/1 provides that in the context of formula products, it is necessary to determine the meaning of the term 'infants' in item 13 and the age range of the children covered by the term. GSTD 2026/1 provides that only supplies of formula products for children aged up to 12 months are GST-free under item 13 because these products are of a kind marketed principally as food for infants (paragraph 23). Supplies of formula products for children aged from 12 months are not GST-free under item 13 because these products are not of a kind marketed principally as food for infants (paragraph 24). As the Product is marketed for children aged over 12 months, it is not food of a kind marketed principally for infants within the meaning of item 13. Food of a kind principally marketed for invalids GSTD 2026/1 does not cover supplies of beverages and ingredients for beverages of a kind marketed principally as food for invalids. The word 'invalids', as referred to in item 13, is not a defined term under the GST Act. There is no evidence of a relevant trade meaning for the term invalid. In Cascade Brewery Company Pty Limited v Commissioner of Taxation [2006] FCA 821, Sundberg J observed at [27] and [40] that the terms 'infant' or 'invalids' take their ordinary meaning. The following dictionary definitions assist in determining the ordinary meaning of the word 'invalid': The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne: Noun 1 . a person enfeebled or disabled by illness or injury. 2 . [ attrib. ] of or for invalids: invalid car | invalid diet . • being an invalid: caring for her invalid parent . verb 2. [usu. in passive ] [ tr. ] disable (a person) by illness. 3. [ intr. ] become an invalid. The Macquarie Dictionary, http://www.macquariedictionary.com.au/ online, accessed 15 May 2026: invalid 1 noun 1. an infirm or sickly person. 2. ... - adjective 3. deficient in health; weak; sick: his invalid sister. 4 . of or for invalids: invalid diets. - verb ( t ) 5 . to affect with disease; make an invalid: invalided for life. 6 . ... - verb ( i ) 7. to become an invalid. [Latin invalidus infirm, not strong] The Product is labelled as food for special medical purposes and is intended to be consumed by children with certain allergies. We do not consider the Product to be marketed principally as food for invalids. This is because a person who is unable to tolerate certain food would not ordinarily be characterised as an 'invalid' within the ordinary meaning of that term. As the Product is marketed for children aged over 12 months and is not food of a kind marketed principally as food for invalids, it is not food of a kind listed in item 13. | Detailed Reasoning - Conclusion: The Product is supplied in powder form and the direction for use is to add the powder to water to make a drink. The Product is marketed for children aged over 12 months with certain allergies. Having regard to its composition, the Product cannot be characterised as a plant-based milk powder, as ordinarily understood. Rather, it is a nutritional formula made from a wide range of ingredients and developed to meet the dietary needs of children with certain allergies. As outlined above, the Product is not a beverage. Rather, it is an ingredient for a beverage for human consumption and therefore falls within the definition of food under paragraph 38-4(1)(d) of the GST Act. Further, the Product is not an ingredient for a beverage of a kind specified in Schedule 2. Accordingly, the supply of the Product is not GST-free under section 38-2 of the GST Act. The supply of the Product therefore is a taxable supply.