Private ruling: GST and supply of tea concentrate
Date of advice: 18 May 2017
Published: September 2017

Ruling: Q1: Will the supply of the product be a GST-free supply of food? | A1: Yes. The product is a GST-free supply of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) as it 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.

Relevant facts and circumstances: You are registered for GST. You will be supplying a liquid concentrate made from leaf tea to be mixed with milk to produce tea. It will be supplied in bottles. Labelling and marketing will promote the product as an ingredient for making tea.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999: Section 38-2 | Section 38-3 | Paragraph 38-3(1)(d) | Clause 1 of 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 section 38-4 of the GST Act to include beverages and ingredients for beverages for human consumption. Your product is a tea concentrate. It is an ingredient for a beverage for human consumption and therefore satisfies the definition of food in paragraph 38-4(1)(d) of the GST Act. However, under paragraph 38-3(1)(d) of the GST Act, beverages or ingredients for beverages will only be GST-free if they are of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2). The item in Schedule 2 that is applicable to your product is: Item 7 preparations for drinking purposes that are marketed principally as tea preparations, coffee preparations, or preparations for malted beverages It is accepted that the product is a preparation for drinking purposes. In determining what is considered food for human consumption, a marketing test applies to item 7. The marketing of a food item is usually determined by how the goods are promoted or advertised. The advertising and label present the product as an ingredient for making tea. Therefore, the product is principally being marketed as a tea preparation. The product meets the requirements of Item 7 of Schedule 2 as a preparation marketed principally as a tea preparation. Your supply of this product will not fall within any of the other exclusions in section 38-3 of the GST Act. As such the supply of the product will be GST-free.