Private ruling: GST and iced water for take-away
Date of advice: 22 February 2021
Published: April 2021

Ruling: Q1: Is the supply of ice added to the supply of a beverage, being water, a partly taxable supply for the purposes of section 9-80 of the A New Tax System (Goods and Services Tax) Act 1999 ? | A1: No, as there is no separate charge for the ice, and the ice forms part of another GST-free supply, being a beverage of water, section 9-80 of the GST Act will not operate to treat the supply of iced water as a mixed supply that is partly taxable under section 9-5 of the GST Act (ice) and partly GST-free (water) under section 38-2 of the GST Act. Your supply of water with the addition of ice is GST-free under section 38-2 of the GST Act.

Relevant facts and circumstances: • You supply water from a custom-fitted mobile van. • The water is natural water, non-carbonated and without any other additives, including flavours and colours • You add cubed and crushed ice into the cup if the customer requests it. • There is no separate charge for ice; water with ice and water without ice are sold at the same price. • The van is parked outside of any enclosed grounds surrounding any food outlet, or any enclosed space such as a football ground, garden, amusement park or similar area. The van is parked on the side of the road, with footpath access and the water is not for consumption at the site.

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 9-15 | A New Tax System (Goods and Services Tax) Act 1999 Section 9-80 | 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 Section 38-4 | A New Tax System (Goods and Services Tax) Act 1999 Schedule 2

Reasons for decision: Summary: Ice is neither a beverage nor a food, and a supply of ice will be subject to GST. However, as there is no separate charge for the ice and the ice forms part of another GST-free supply, being a beverage of water, section 9-80 of the GST Act will not operate to treat the supply of iced water as a mixed supply that is partly taxable under section 9-5 of the GST Act (ice) and partly GST-free (water) under section 38-2 of the GST Act. Your supply of water with the addition of ice is GST-free under section 38-2 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. Food is defined in section 38-4 of the GST Act to include a beverage for human consumption (paragraph 38-4(1)(c) of the GST Act). | Detailed Reasoning - Beverage: The supply of water is GST-free where it is a beverage of a kind specified in the third column of the table in clause 1 of Schedule 2 of the GST Act. Water is a beverage as it is included as subsection 38-4(2) of the GST Act. The third column of item 14 of Schedule 2 of the GST Act provides natural water, non-carbonated and without any other additives is GST-free. Hence your supply of the water for take away is a GST-free supply under section 38-2 of the GST Act | Detailed Reasoning - Ice: The ATO View for a supply of ice is contained in Issue 15 of the Food Industry Partnership Issues Register as follows: Issue 15 Is ice considered to be food for human consumption and therefore GST-free? • Ice is not considered a beverage, as it is not a liquid. Only those beverages that are specifically included in Schedule 2 of the GST Act are GST-free. Further, ice is not considered to be a food as it has no nourishment, no calories and no energy. Ice is generally used for cooling and storage purposes. As a consequence of the above, a supply of ice will be subject to GST. Further to this, where ice forms part of another supply, for example, fish is packed on ice or ice is added to a drink, the ice is generally supplied for no consideration. However, where there is a separate charge for the ice, section 9-80 will operate to treat the supply as a mixed supply. The ice is added to the water, and your supply of ice will be subject to GST if there is a separate charge for the ice. | Detailed Reasoning - Partly taxable supply - section 9-80 of the GST Act: GST is payable on taxable supplies and under section 9-5 of the GST Act you make a taxable supply if: (a) you make the supply for * consideration; ... Section 9-15 of the GST Act defines consideration as: | Detailed Reasoning - (1): Consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything Section 9-80 of the GST Act on the value of taxable supplies that are partly GST-free or input taxed states: | Detailed Reasoning - (1): If a supply (the actual supply ) is: (a) partly a * taxable supply; and (b) partly a supply that is * GST-free or * input taxed; the value of the part of the actual supply that is a taxable supply is the proportion of the value of the actual supply that the taxable supply represents For ice to be included in the value of the taxable supplies for the purpose of section 9-80 of the GST Act, the supply of ice needs to be a taxable supply. You are supplying, to your customers, ice with their water and the ice is being supplied at no extra cost. As you are supplying the ice for no consideration, it will not meet the definition of a taxable supply in section 9-5(a) of the GST Act. As there is no separate charge for the ice, section 9-80 of the GST Act will not operate to treat the supply as a mixed supply that is partly taxable under section 9-5 of the GST Act (ice) and partly GST-free (water) under section 38-2 of the GST Act. | Detailed Reasoning - Takeaway food: For completeness, food for consumption on the premises (paragraph 38-3(1)(a) of the GST Act) will not be GST-free. Goods and Services Tax Determination (GSTD) 2000/4 states that: 1. The ordinary meaning of the word 'premises' is widened by the definition in section 38-5 of the A New Tax System (Goods and Services Tax) Act 1999 . Premises falling within the section 38-5 definition include: • the place where the supply takes place - for example, supermarkets, restaurants, cafes, snack bars, hotels, motels, bed and breakfasts, clubs, reception lounges, aircraft, boats, trains, venues for catered functions, or food courts where tables are supplied for customers of food retailers; • the grounds surrounding restaurants, cafes, snack bars, hotels, clubs, reception lounges and venues for catered functions; and • any venues, associated with leisure, sport or entertainment, with clear boundaries or limits. 2. However, premises do not include public thoroughfares unless an area has been designated for use in connection with the food supply outlet. Paragraph 3 of GSTD 2000/4 describes venues associated with leisure, sport or entertainment. From the facts, the take-away iced water is not for consumption on such premises. Hence the supply of the water with the addition of ice is not excluded from being GST-free by paragraph 38-3(1)(a) or 38-1(d) of the GST Act. Your supply of water with the addition of ice is GST-free.