GST issues registers

Food industry partnership

Issue 14 – Beverages for infants

For source of ATO view, refer to the Detailed food list.

What is the definition of 'infant' for the purposes of the GST Act?

Item 13 of the table in clause 1 of Schedule 2 of the GST Act (item 13) provides that 'beverages, or ingredients for beverages, of a kind marketed principally as food for infants or invalids' will be GST-free.

The word 'infant' is not defined for the purposes of item 13. Although the ordinary meaning is generally adopted where a word is not defined in the Act, there are instances where it is more appropriate to adopt the trade meaning of a word.

The word 'infant' is defined in the Food Standards Australia New Zealand/Food Standards Code at clause 1 of Standard 2.9.2 as 'a person up to the age of 12 months'.

The Courts in Collector of Customs v. Agfa-Gevaert Ltd 35 ATR 249 stated:

'When construing revenue statutes that utilise trade or technical terms, therefore, the law generally favours interpretation of the terms as they are understood in the trade to which the statute applies. In Herbert Adams Pty Ltd v FCT, Dixon J said:

A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned.'

The judges went on to say:

'…Nevertheless, when construing a composite phrase which does not have a trade meaning, it will ordinarily make sense for a court or tribunal to take notice of the trade meaning of a word or words within that expression, provided such an interpretation does not lead to a result which is absurd in the sense that the result may be unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, or artificial. Consideration of the trade meaning of individual words in such cases is more likely than not to lead to the interpretation that the makers of the instrument had in mind.'

Therefore the meaning to be attributed to the word 'infant' as referred to in item 13 is the trade meaning which is clearly reflected in the Food Standards Australia New Zealand/Food Standards Code. Food and beverages for infants are commonly known within the food industry as providing specific nutritional benefits to a group that are yet unable to consume ordinary foods. The Australia New Zealand Food Authority (ANZFA) has stated:

'Infants have different physiological needs from other population groups which influence food suitability. These physiological differences relate to the degree of development of tongue and facial musculature, digestion ability, renal capacity, the 'unique' microbiological and immunological susceptibility of infants, the potential for development of food allergy or the adverse reactions to foods and the need for high energy and nutrient intake to support rapid growth and development…

The developing functional capacity of the body organs of infants gradually improves the infant's ability to deal with the composition of a wide range of foods. However, the younger the infant, the less capable is the infant's body in dealing with different food consistencies and compositions.' - Australia New Zealand Food Authority, Explanatory Notes, Proposal P215, Food for infants and young children, 13 October 1999 (www.anzfa.gov.au)

It was clearly intended by the legislature that the beverages and ingredients for beverages referred to in item 13 are those to be consumed by people with special dietary needs. Therefore, the word 'infant' for the purposes of item 13 means 'a person up to the age of 12 months'.

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