Private ruling: GST - ready to drink coffee with milk in a can
Date of advice: 1 February 2023
Published: 20 March 2023

Ruling: Q1: Is the supply of Coffee with milk in a can (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. The supply of the Product is a taxable supply.


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(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: The supply of the Coffee with milk in a can (the Product) is not GST-free under to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The supply of the Product is a taxable supply under section 9-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: 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. The Product is made up of various ingredients which by themselves may be GST-free. However, it is the end product that needs to be considered. The term 'food' is defined in section 38-4 of the GST Act to include, among other things, beverages for human consumption (paragraph 38-4(1)(c) of the GST Act) and the Product being a beverage for human consumption, satisfies the definition of food. However, paragraph 38-3(1)(d) of the GST Act provides that 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 beverages category in Schedule 2 that is relevant for consideration is the category of 'Tea, coffee etc'. Included in this category are the following: Clause 2 of Schedule 2 states that none of the items in the table relating to the category of tea, coffee etc include any beverage that is marketed in a ready-to-drink form. | Detailed Reasoning - Application to this case: The Product is double shot coffee with milk. The Product is a liquid with a brownish colour. The Product is sold in a ready-to-drink form and requires one to shake before opening to drink. The Product is a preparation for drinking purposes marketed principally as coffee preparations, hence it is of a kind listed in item 7 and a beverage of a kind specified in Schedule 2. However, as the Product is supplied in a ready-to drink form, the exclusion in clause 2 of Schedule 2 applies. Hence, the supply of the Product is not GST-free pursuant to section 38-2 of the GST Act. | Detailed Reasoning - Taxable supply: The supply of the Product is a taxable supply if the requirements of section 9-5 of the GST Act are satisfied as follows: • the supply of the Product is for consideration • the supply of the Product is made in the course of your enterprise • the supply of the Product is connected with Australia and • you are registered for GST. Furthermore, the supply of the Product is neither GST-free nor input taxed under any provisions of the GST Act or another Act. Therefore, as all the requirements of section 9-5 of the GST Act are satisfied, the supply of the Product is a taxable supply.

Relevant facts: You operate a business that produces the Product. | The Product is in a slim line can of a specified volume. | You provided pictures of the Product and the label, which include: | The Product is dairy free, sweetener free, no added sugar, preservative free and naturally sweetened. | The Product contains a double shot of coffee. | The ingredients include water, brewed coffee and plant-based milk. | There is an instruction to shake before opening, store in a cool dry place and once opened to refrigerate and consume within 24 hours. | The ingredients are mixed, canned and then put through a retort process. | The Product is coffee and tastes like an iced milk latte that you get from a café. | The Product can be stored at room temperature for up to a number of months. The Product can be sold in the drinks fridge. Once opened, the Product needs to be drank within 24 hours and kept cold. | The Product will be sold wholesale to retailers. The Product will also be sold online from your website. | Item 5 of Schedule 2 (item 5) provides that coffee and coffee essence is GST-free. | Item 7 of Schedule 2 (item 7) provides that preparations for drinking purposes that are marketed principally as tea preparations, coffee preparations, or preparations for malted beverages are GST-free.