TAXATION RULING NO. ST 2274

ST 2274

SALES TAX : CHOCOLATE COATED FROZEN BANANAS

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FOI status:

PREAMBLE

The sales tax classification of chocolate coated frozen bananas on sticks has recently been considered. The relevant legislative provisions are item 23 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act and item 4 in the Third Schedule.

2. Item 23, First Schedule exempts from sales tax -

"Goods -

(a)

of a kind sold exclusively or principally; or

(b)

put up for sale, as food for human consumption ... but not including -

...

(d)

confectionery or goods of a kind marketed exclusively or principally as ingredients of confectionery;

...

(h)

goods, being ice-cream, ice-cream cakes, ice-creams, ice-cream substitutes, frozen confectionery (other than frozen yoghurt), flavoured iceblocks (whether or not marketed in a frozen state) or similar goods, other than any such goods manufactured in premises or vehicles in which the business of manufacturing goods of that kind is carried on exclusively or principally for the purpose of sale by retail directly from those premises or vehicles;

..."

3. Item 4, Third Schedule taxes at the rate of 10% goods that would be covered by item 23, First Schedule but for the operation of paragraphs (d) or (h) of that item.

4. The combined effect of item 23, First Schedule and item 4, Third Schedule is that confectionery and frozen confectionery are taxable at 10%. By clause 1(1) of the First Schedule, confectionery includes goods marketed as confectionery, or consisting principally of confectionery, and confectionery novelties.

FACTS

5. Chocolate coated frozen bananas are prepared for sale as follows:-

(a)

the banana is peeled and the stick inserted;

(b)

the banana is then frozen and dipped in chocolate;

(c)

the finished article is packaged and kept in refrigerated conditions.

RULING

6. Although the frozen bananas are inserted on sticks and chocolate coated, this does not make them confectionery. Bananas are fruit and it is considered that the freezing of them, which is to preserve them, and covering them with a chocolate coating does not alter their basic nature. The processes applied to the bananas do not make them frozen confectionery or similar goods to frozen confectionery. Chocolate coated bananas on sticks are exempt from sales tax under item 23, First Schedule.

COMMISSIONER OF TAXATION
27 August 1986

References

ATO references:
NO 84/5326-8

Date of effect:
Immediate

Subject References:
CONFECTIONERY
FROZEN CONFECTIONERY
CHOCOLATE COATED
FROZEN BANANAS

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT; ITEM 23, FIRST SCHEDULE;
ITEM 4, THIRD SCHEDULE