ATO Interpretative Decision
ATO ID 2004/677
Goods and Services Tax
GST and spirulina powderFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies spirulina powder?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies spirulina powder.
Facts
The entity is a food supplier. The entity supplies spirulina powder.
The label on the spirulina product describes it as a natural food containing protein, chlorophyll and vitamins.
Promotional materials describe the product as a nutrient rich food and indicate that the product can be added to a range of recipes such as dips, bread, biscuits, gravies and etcetera as an ingredient, or added directly to dishes such as salads. Spirulina powder may also be consumed by adding to water or fruit juice.
The entity is registered for goods and services tax (GST).
Reasons for Decision
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 its 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 food for human consumption (whether or not requiring processing or treatment) under paragraph 38-4(1)(a) of the GST Act. Although spirulina powder is sometimes used as an ingredient in food or consumed by adding to a beverage, it is generally supplied as a food in its own right and therefore satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act.
However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Spirulina powder is not food of a kind specified in Schedule 1.
In addition, the supply of spirulina powder does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies spirulina powder.
Note: this decision should not be interpreted as meaning that spirulina tablets or capsules are GST-free. Spirulina tablets and capsules are not food and are subject to GST.
Date of decision: 9 August 2004
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(c)
section 38-4
paragraph 38-4(1)(a)
Schedule 1 clause 1
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
ISSN: 1445-2782