Private ruling: GST and whey powder
Date of advice: 25 September 2025
Published: 24 November 2025

Ruling: Q1: 1. Is your supply of the Whey Product in Australia a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? 2. Is your importation of the Whey Product into Australia a non-taxable importation under section 13-10 of the GST Act? | A1: 1. No, your supply of the Whey Product is not GST-free as it is excluded from being GST-free under paragraph 38-3(1)(c) of the GST Act. 2. No, your importation of the Whey Product is a taxable importation under subsection 13-5 (1) of the GST Act.

Relevant facts and circumstances: You are registered for GST. You advise that: • the Whey Product is a whey permeate powder. • Whey is a by-product of cheese making and is used to make whey protein concentrate. • Whey permeate is a by-product of whey protein concentrate making. • The Whey Product is made by ...for the food industry. You import the Whey Product into Australia and sell to your buyer, who uses the Whey Product to manufacture chocolate and confectionery chocolate products. You import the Whey Product to sell it to X who uses the Whey Product as an ingredient for their manufacturing of chocolate and chocolate confectionery. The Product Specification states that the Product Application is chocolate. You advised: • The Whey Product is used in the chocolate industry as an ingredient in chocolate and as an ingredient in chocolate confectionery, e.g. milk chocolate, dark chocolate, white chocolate, chocolate blocks, chocolate bars, Easter eggs, chocolate drops and buttons etc. • The Whey Product is used as an ingredient in confectionery products such as candies, gummies, marshmallows, jellies etc. It is used to add mass to the product, while imparting a mildly sweet flavour. • The Whey Product is used to add mass to a chocolate product while contributing a mildly sweet flavour. It presents as a fine powder which contributes to a smooth texture of the finished chocolate or confectionery. • The Whey Product is used as a bulking agent by replacing milk powder or lactose in the chocolate ingredients. You sent information on the website of the manufacturer, the ingredients, the composition and the manufacturing process of the Whey Product. You sell the Whey Product in bulk packaging with plain label which contains the name, and the brand only. No direction for use is on the packaging.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act): section 38-2 | section 38-3 | paragraph 38-3(1)(c) | section 38-4 | paragraph 38-4(1)(a) | section 9-5 | section 13-5 | section 13-10 | Schedule 1 clause 1 table item 8

Reasons for decision: Detailed Reasoning - Relevant Legislation: 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 ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act), ingredients for beverages for human consumption (paragraph 38-4(1)(d) of the GST Act) and goods to be mixed with or added to food for human consumption (paragraph 38-4(1)(e) of the GST Act). The Whey Product is used in the manufacturing of chocolate per its Product Specification, hence it is considered ingredient for food for human consumption and therefore satisfy the definition of food in paragraph 38-4(1)(b) of the GST Act. The next thing to consider is whether the Whey Product falls within any of the other exclusions in section 38-3 of the GST Act. The exclusion in paragraph 38-3(1)(c) of the GST Act Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind that is specified in Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind. Of a kind and overall impression The phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary online , www.macquariedictionary.com.au , accessed 15 September 2025, does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean: '1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4...' In sales tax cases, when considering whether a product was 'of a kind', the Courts determined the 'essential character of the goods'. Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part. The GST case Lansell House Pty Ltd v Commissioner of Taxation [2010] FCA 329 ( Lansell 2010 ) did not provide an essential character test, rather it provided an overall impression test. Sundberg J held that the words in item 32 are not used in a specialised or trade sense that differs from their ordinary usage, and that it is a matter of overall impression in deciding the proper classification of a product. The Full Federal Court in Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6 ( Lansell 2011 ) upheld the Federal Court's decision and at [30] relevantly provided: ...The use of the words "of a kind" in s 38-3(1)(c) of the GST Act adds further generality to the description of the items described in Schedule 1: Air International Pty Ltd v Chief Executive Officer of Customs (2002) 121 FCR 149 per Hill J. Thus, a new product that does not possess all of the same characteristics of known crackers may nevertheless be within the relevant item...The question is whether the resulting product comes within the genus, class or description of a cracker. The meaning of the phrase 'of a kind' was also considered in Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115 ( Simplot ) at [98-99], applying Cascade Brewery Co Pty Ltd and Another v Commissioner of Taxation [2006] FCA 821( Cascade) at [16] and Lansell 2011 at [30]. It was considered that words 'of a kind' are words of expansion rather than limitation. They have the effect that the question is not whether the product is the particular item of food specified in column 3 of the table in Schedule 1, but whether the product is a member of a class or genus of food of the item specified. The Product specification provides the Whey Product is marketed for use in the manufacture of chocolate, this would include confectionery products. Hence item 8 is relevant for consideration. Item 8 Item 8 lists 'confectionery, food marketed as confectionery, food marketed as ingredients for confectionery or food consisting principally of confectionery'. The Whey Product, being whey permeate powder, is not confectionery, food marketed as confectionery or food consisting principally of confectionery. The remaining issue is to determine whether the Whey Product is a member of a class or genus of foods that are marketed as ingredients for confectionery. Marketing test The word 'marketed' is not defined in the GST Act and therefore it takes its ordinary meaning. The term 'marketed' was considered by Sundberg J in Cascade . Specifically, whether Ultra-C (the product at issue) was 'marketed principally as food for infants or invalids' so that it would fall within Item 13 of Schedule 2. Sundberg J looked at the dictionary definition of the term as a guide to determine its ordinary meaning. The dictionary definitions cited by Sundberg J define 'marketing' as 'the total process whereby goods are put onto the market' or 'the action or business of promoting and selling products, including market research and advertising'. His Honour stated at [11], that assessing how a food or beverage is 'marketed' requires 'an examination of the content of the advertising and other marketing in fact carried out either by the taxpayer or by competitors in the market': The words "marketed principally as food for infants" in item 13 require an examination of the content of the advertising and other marketing in fact carried out either by the taxpayer or by competitors in the market. The witnesses to whom I have referred spoke somewhat generally about their aims and hopes in respect of the marketing. The relevant findings at [9] are based on the content of the marketing, that is to say, on what a reader of the labels, the Bounty bag brochure and the print advertisements or a viewer of the television advertisements would derive from them . The findings do not entirely accord with the witnesses' evidence about Cascade's aims. That evidence seems to me to have been subconsciously influenced by the existence of item 13 and the purpose of the litigation. It is perhaps worth noting that the use of 'principally' in Schedules 1 and 2 creates a higher test as it is included as an additional qualifier. Item 8 of Schedule 2 is not qualified by the use of 'principally' therefore a lesser standard in terms of the level of marketing activity is required. The public ruling GSTD 2025/1 - Goods and services tax: supplies of food of a kind marketed as a prepared meal (the GST Determination) discusses the meaning of 'marketed as' in the Federal Court's decision in Simplot. The following extract of paragraphs in the GST Determination are relevant: | Detailed Reasoning - Marketed as: 33. In determining whether a product is food of a kind marketed as a prepared meal, it is necessary to consider the kinds of food that are marketed as a prepared meal. The marketed use of a product is to be determined objectively, having regard to what a reasonable observer would understand from the content of the marketing. 34. The marketing of a product involves the end-to-end process where products are put onto the market. This includes promotional and sales activities. The content of the marketing is what those activities objectively convey to the market. 35. Marketing includes labelling (including the name), packaging, display, product placement, promotion and advertising. Marketing does not include internal activities of the seller, nor is it determined by the subjective intention or motivation of the seller. These things do not convey any message to the market. The application of the marketing test to the Whey Product: In determining whether you market the Whey Product as 'ingredients for confectionery', consideration must be given to your total process in promoting and selling the Products- Cascade Brewery at [23]-[26]. This includes: • the name of the goods • the price of the goods • the labelling on any containers for the goods • literature or instructions packed with the goods • how the goods are packaged • how the goods are promoted or advertised • how the goods are distributed. The name of the Whey Product: The Whey Product is sold in bulk packaging with the Product name, brand and quantity printed on the packaging. While the name of the Whey Product may not convey that it is used as ingredients for confectionery, this is not a determinative factor on its own. The price of the Whey Product There is no price differentiation if the Product is used for confectionery versus non confectionery. We consider that, in the present case, the price of the Whey Product is not a determinative factor. Labelling on the containers, packaging and literature or instructions packed with the Products There is no literature or instructions on the packaging of the Whey Product. The Whey Product is sold in plain packaging. We consider that the use of standard labelling and packaging, and the lack of literature or instructions on the packaging is not determinative of whether the Whey Product is marketed as an ingredient for confectionery. How the goods are promoted or advertised and distributed You sell the Whey Product in bulk to M, for use in their manufacturing of chocolate, including confectionery products. You advised that you do not advertise the Whey Product because you import the Whey Product for the purpose of selling to X only. In your case, the only marketing of the Whey Product to the public would be in the Product Specification that the Product Application is for chocolate. Consistent with the relevant cases, as cited above, marketing is the activities of the seller in communicating or conveying messages to the market for the promotion or sale of the product. The above is consistent with your advice about the use of the Whey Product as follows: • The Whey Product is used in the chocolate industry as an ingredient in chocolate and as an ingredient in chocolate confectionery, e.g. milk chocolate, dark chocolate, white chocolate, chocolate blocks, chocolate bars, Easter eggs, chocolate drops and buttons etc. • The Whey Product is used as an ingredient in confectionery products such as candies, gummies, marshmallows, jellies etc. It is used to add mass to the product, while imparting a mildly sweet flavour. • The Whey Product is used to add mass to a chocolate product while contributing a mildly sweet flavour. It presents as a fine powder which contributes to a smooth texture of the finished chocolate or confectionery. • The Whey Product is used as a bulking agent by replacing milk powder or lactose in the chocolate ingredients. The information on the manufacturer's website, and the Product Specification say the Whey Product can be used for many applications. However, they also specifically market the Products as ingredients for confectionery. This information indicates your intention and aim to promote the Products to the manufactures of chocolate and chocolate confectionery. As a seller, you are communicating or conveying messages to the confectionery manufacturers for the promotion or sale of the Whey Product. Conclusion Accordingly, we consider that the Whey Product is a member of a class or genus of foods that are marketed as ingredients for confectionery or are of a kind marketed as ingredient for confectionary and therefore covered under item 8. The supply of the Whey Product therefore is not GST-free under section 38-2 of the GST Act as the Products are excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. | Detailed Reasoning - 2. The importation of the Products: GST is payable on taxable importations. Subsection 13-5 (1) of the GST Act provides that you make a taxable importation if: a) goods are imported; and b) you enter the goods for home consumption (within the meaning of the Customs Act 1901) . We consider that the Whey Product is goods imported by you. Therefore paragraph 13-5(1)(a) of the GST Act is satisfied. You acquire the Whey Product from the supplier overseas and import them into Australia. Hence you meet the requirement of paragraph 13-5(1)(b) of the GST Act as you are the entity that enters the goods for home consumption. However, the importation is not a taxable importation to the extent that it is a non-taxable importation (subsection 13-5(3)). Section 13-10 of the GST Act provides that an importation is a non-taxable importation if: a) it is a non-taxable importation under Part 3-2 of the GST Act; or b) it would have been a supply that was GST-free or input taxed if it had been a supply. The importation of the Whey Product is not a non-taxable importation under Part 3-2 of the GST Act therefore paragraph 13-10 (a) is not met. The importation can only be a non-taxable importation under paragraph 13-10 (b) of the GST Act if it would have been a supply that was GST-free or input taxed if it had been a supply. As concluded in question 1, the supply of the Whey Product would be a taxable supply. As such, the importation of the Whey Product does not meet the requirement of subsection 13-10(b) to be a non-taxable importation. Hence the importation of the Products is a taxable importation under subsection 13-5 (1) of the GST Act.