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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 sells organic powdered fruit?

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act, when it sells organic powdered fruit.

The entity is a food supplier. The entity sells organic powdered fruit.

The fruit powder can be added to cakes and other baked or cooked food for flavour.

The entity is registered for goods and services tax (GST).

A supply of food is GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.

Section 38-4 of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of most relevance to this case is paragraph 38-4(1)(b) of the GST Act.

Paragraph 38-4(1)(b) of the GST Act provides that food includes ingredients for food for human consumption. Organic powdered fruit is considered to be an ingredient for food for human consumption under paragraph 38-4(1)(b) of the GST Act.

However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind that is specified in clause 1 of Schedule 1 to the GST Act (Schedule 1). Organic powdered fruit does not fall within any of the items listed in Schedule 1.

In addition, the supply of organic powdered fruit 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 sells organic powdered fruit.