Private ruling: GST and the importation of a product canisters
Published: March 2012

Ruling: Q1: Is your importation of a product (Product) that is added to a food during its manufacturing process subject to goods and services tax (GST)? | A1: No.

Relevant facts and circumstances: You are registered for GST. You import then sell the Product. The Product is marketed and packaged principally as a product to be added to a food during its manufacturing process. The Product (and identical products) can be purchased by the general public on-line.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act): Section 13-10 | Section 38-2 | Section 38-3 | Section 38-4.

Reasons for decision: Summary: Non taxable importation Section 13-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an importation is non-taxable (not subject to GST) if: · it is a non-taxable importation under Part 3-2 of the GST Act, or · it would have been a supply that was GST-free (or input taxed) had the supply been made in Australia. GST-free supply made in Australia The only provisions in the GST Act that may allow the supply of the Product to be GST-free if supplied in Australia is as a supply of food. The supply of food is GST-free under section 38-2 of the GST Act provided the food does not come within any of the exclusions listed in section 38-3 of the GST Act. Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of the foods defined in this provision, the most relevant to your circumstances is paragraph 38-4(1)(e) which provides for goods to be mixed with or added to food for human consumption. The Product is imported principally as a product to be added to a food during its manufacturing process and thus the Product is consumed with the food. Consequently, we consider the Product is a good that is added to food for human consumption and therefore, it can be treated as a food under paragraph 38-4(1)(e) of the GST Act. Food that is excluded from being GST-free One possible exclusion is paragraph 38-3(1)(c) of the GST Act that makes the supply of a food taxable is if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind. In this case, the Product does not come under any of the items listed in Schedule 1. The only other possible exclusion that could be applied to the supply of the Product is paragraph 38-3(1)(e) of the GST Act. This paragraph specifies that a supply of food is taxable if it is a supply of food of a kind specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations). In particular, regulation 38-3.02 of the Regulations applies to food additives and determines those food additives that are taxable or GST-free. Food additive The term food additive is not defined in the GST Act or any other Act therefore we must use its everyday meaning. The word additive is defined in the Macquarie Dictionary (5th edition) to mean a substance added to a product, usually to preserve or improve its quality. Examples of products that are considered to be additives for GST purposes include colourings, flavourings, preservatives, antioxidants, sweeteners, vitamins, minerals and modifying agents. In your case, we consider the Product to be an additive as it is added into food products and substantially modifies the food. Subregulation 38-3.02(1) of the Regulations states that food additives other than exempt food additives will be subject to GST. The term exempt food additive is defined in subregulation 38-3.02(2) of the Regulations and includes: (a) a food additive which, at the time of supply is packaged and marketed for retail sale ….. In this case, the Product can be purchased by the general public. Therefore, the supply of the Product would be the supply of an exempt food additive under paragraph 38-3.02(2)(a) of the Regulations and hence, would be GST-free under paragraph 38-2 of the GST Act. Consequently, your importation is non-taxable under section 13-10 of the GST Act and therefore would not be subject to GST.

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