GST issues registers

Primary production industry partnership

7 Livestock

7.1 Cattle

7.2 Game

7.2.1 - Game carcasses

Question

Will the supply of game carcasses from a harvester to a wild game processor be subject to GST?

Non-interpretative - straight application of the law

Answer

Yes.

Explanation

The supply of food for human consumption is GST-free under conditions laid down in Subdivision 38-A of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Section 38-4 of the GST Act states:

(1)

Food means any of these, or any combination of any of these:

(a)

food for human consumption (whether or not requiring processing or treatment);

(b)

ingredients for food for human consumption;

(c)

beverages for human consumption;

(d)

ingredients for beverages for human consumption;

(e)

goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings);

(f)

fats and oils marketed for culinary purposes;

but does not include:

(g)

live animals (other than crustaceans or molluscs); or

(h)

unprocessed cows milk; or

(i)

any grain, cereal or sugar cane that has not been subject to any process or treatment resulting in an alteration of its form, nature or condition; or

(j)

plants under cultivation that can be consumed (without being subject to further process or treatment ) as food for human consumption.

(2)

Beverage includes water.

In addition the fact sheet, GST on livestock and game sales (NAT 3508) has been released by the ATO. One of its main functions was to explain when meat becomes food for GST purposes.

In accordance with the legislation and the supporting fact sheet a carcass is considered food for human consumption once an authorised person has inspected it and either stamped or passed it as food for human consumption (in accordance with Federal, State or Territory law).

Prior to this point livestock/carcasses are not considered to be food for human consumption and will be subject to GST.

In relation to the purchase of game carcasses by a game processor, the carcasses have not been inspected and either stamped or passed as food for human consumption by an authorised person.

Therefore, at the time of supply of game carcasses to a game processor, they are not food for human consumption and the supply will be subject to GST.

The accreditation of the chiller box operators and harvesters relate to the receipt of carcasses intended as food for human consumption. This can be distinguished from inspection and passing (by an authorised person) of meat for actual human consumption.

7.3 Horses

7.4 Levies

7.4.1 - Livestock Transaction Levies

Question

What is the correct treatment in relation to GST and the deduction of livestock transaction levies?

Non-interpretative - straight application of the law

Answer

These levies are calculated on the value of the product. They are then deducted from the price of the product. The price is GST-inclusive.

Explanation

The primary industry levies on livestock are imposed under the Primary Industries (Excise) Levies Act 1999. Livestock levies become payable on or after the sale of livestock and are deducted from the GST inclusive price of the livestock. Most of the primary industry levies are imposed on a volume basis not a value basis.

The levies themselves are not subject to GST as they fall within the regulations made for the purpose of section 81-15 which prescribes fees and charges that do not constitute consideration.

For the treatment of fees and charges under Division 81 refer to - GST treatment of Australian fees or charges under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999.

For example:

In the example above, the farmer will be liable to remit $300 to the Australian Taxation Office. The purchaser on making a creditable acquisition may be entitled to an input tax credit of $300.

7.4.2 - Rural Lands Protection Board (RLPB) rates

Question

Will Rural Lands Protection Board (RLPB) rates that apply on the basis of the number of stock carried on farms be GST free?

Non-interpretative - straight application of the law

Answer

Yes.

Explanation

These levies will not be subject to GST since payment, or the discharging of a liability to make a payment of the levy, is not the provision of consideration under Division 81.

For more information refer to PS LA 2013/2 (GA) - GST treatment of Australian fees or charges under Division 81 of the A New Tax System (Goods and Services Tax) Act 1999.

7.5 Sales

7.5.1 - Livestock, game and carcasses

Question

How does GST apply to livestock, game and carcasses sales?

Non-interpretative

Answer

Please refer to the fact sheet GST on livestock and game sales (NAT 3508).

7.20 Sundry

7.20.1 - Importation of fresh or frozen animal semen

Question

What is the GST treatment on the importation of frozen/fresh animal semen?

Non-interpretative - straight application of the law

Answer

The importation of frozen and fresh semen is subject to GST upon importation. Subsequent importations of semen supplied free of charge under warranty are non-taxable importations (not subject to GST).

Explanation

Frozen and fresh semen is generally supplied in the first instance by overseas stud farms and breeders, with freight, packaging and handling charges paid by the overseas supplier. A fee for the supply of the semen is payable upon confirmation of a successful insemination, however it is not uncommon for an animal to be inseminated several times before a positive result is achieved.

The Australian Customs Service (Customs) has advised that the valuation of the semen at importation is based on the actual price paid or payable. This means that the customs value is based on the transaction value for the importation, which is the value agreed (contracted) when the order was placed for the semen.

The semen is subject to GST and the amount of GST payable on this taxable importation(s) is defined in Section 13-20 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) as:

'(1)

The amount of GST on the taxable importation is 10% of the value of the taxable importation.

(2)

The value of a taxable importation is the sum of:

(a)the customs value of the goods imported; and

(b)the amount paid or payable;

(i)for the international transport of the goods to their place of consignment in Australia; and

(ii)to insure the goods for that transport; to the extent that the amount is not already included under paragraph (a);and

(c)

any customs duty payable in respect of the importation of the goods;....'

In the case of an unsuccessful insemination(s), then a replacement/subsequent batch of semen will usually be supplied 'free of charge'. The GST payable on replacement importations of semen, which have been provided at no cost under warranty, will be zero because these replacement importations are non-taxable importations pursuant to Item 18B in the 4th Schedule to the Customs Tariff Act 1995 and subsection 42-5(1) of the GST Act.

If the inseminated animal (for example a mare) slips or aborts its foal, or if the mare has a dead foal, then the owner will usually receive either a free return service, or a refund of the cost of the semen. If a refund is granted then the owner can apply to Customs for a refund of the GST paid.

7.20.2 Transferring livestock

This issue was withdrawn on 1 August 2002

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