Goods and Services Tax Industry Issues
Food Industry Partnership

Farm to 'food' product transformation

• Please note that the PDF version is the authorised version of this ruling.
  This publication is extracted from the Food Industry Partnership - issues register. See issue 2 of that register. This publication should be read in conjunction with the related content of that register where further context is required.

This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

At what point is fresh produce considered to be 'food'?

Livestock

1. This issue is addressed in the GST on Livestock and game sales fact sheet.

Horticultural products (that is, fruit, vegetable, herbs and spices)

2. For the purposes of the GST Act food does not include plants under cultivation that can be consumed (without being subject to further process or treatment) as food for human consumption. Therefore fruit, vegetables, herbs and spices will not be considered food for human consumption until such time as they have been harvested.

Example 1

3. The leaves of a herb plant can be picked and used as an ingredient for food even though the plant is growing in a container. These plants will not be GST-free. However, herbs when sold in bunches and not as part of a living plant will be GST-free.

Example 2

4. A lettuce that is being grown hydroponically will be GST-free when it is picked and sold to the customer.

Fish

5. Live animals, except molluscs and crustaceans (for example, lobsters, oysters and crabs), are subject to GST. Fish, once dead, will be GST-free, irrespective of whether they have been scaled and gutted.

Milk

6. Unprocessed cow's milk is subject to GST (paragraph 38-4(1)(ga) of the GST Act). Therefore, cow's milk will be GST-free once it has been subjected to any process (other than filtration). Such processes may include - separation, evaporation, pasteurisation, re-hydration, homogenisation, and reconstitution.

7. Filtration is not considered to be a 'process', on the basis that all milk leaving the farm has been subjected to some form of filtration and if this were considered a process for the purposes of the GST Act, the provision would become inoperative.

8. Goat's milk is GST-free whether or not it has been pasteurised.

Eggs

9. Eggs, once laid, will be GST-free.

References