Private ruling: GST and your beverage products
Published: November 2011

Ruling: Q1: Is the supply of your product a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. · You are registered for goods and services tax (GST). · Your products are sold from retail outlets. · Your products are sold ready to drink in plastic containers with straws provided. · Your products are beverages that are non-carbonated and non-alcoholic. · Your products are displayed in the chilled drinks section in retail outlets. · The ingredients for the products consists of natural fruits and contain fruit puree/juice (xx-xx%), water (xx-xx%) and flavour/colour/sweetener (<x%). · The products do not consist of at least 90% by volume of the juices of fruits. · In summary the processing steps of the product include the following: o Fruit products are washed, cleaned and impurities removed. o The various fruit products are sliced, cooked and blended into a puree. o The puree, fruits, boiled water and other ingredients are mixed in a heated mixing tank to produce the product blend. o The product blend is then transferred into tubs which are then heat sealed.

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 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(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)

Reasons for decision: Summary: GST is payable on taxable supplies. Section 9-5 of the GST Act provides that you make a taxable supply if: · you make the supply for consideration · the supply is made in the course or furtherance of an enterprise that you carry on · the supply is connected with Australia, and · you are registered, or are required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Your supplies of the listed products satisfy all of the four requirements above, and are not input taxed. We now need to consider whether the supply of your products will be GST-free under Division 38 of the GST Act. 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 (1)(c) beverages for human consumption Your products are beverages for human consumption. However, under paragraph 38-3(1) (d) of the GST Act, beverages are only GST-free if they are specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). Your products are made up of various ingredients including fruit and juice, water and flavour/colour. They have less than 90% by volume of the juices of fruits or vegetables. Item 12 in Schedule 2 (Item 12) lists non-alcoholic non-carbonated beverages, if they consist of at least 90% of juices of fruits or vegetables by volume. The products that you supply are non-alcoholic and non-carbonated. However, they do not consist of at least 90 per cent by volume of the juices of fruits. Therefore, your products are not covered by Item 12. Accordingly, you are not making a GST-free supply under section 38-2 of the GST Act when supplying your products. Therefore, the supply of your products will be subject to GST.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.