Issue
Is the entity, a food supplier, making a taxable supply under section 9-5 of the A New Tax System (Goods & Services Tax) Act 1999 (GST Act), when it sells a right to receive a GST-free supply of food?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it sells a right to receive a GST-free supply of food. The entity is making a GST-free supply under paragraph 9-30(1)(b) of the GST Act.
Facts
The entity is a food supplier. The entity sells a right to receive a GST-free supply of food. The entity is registered for goods and services tax (GST).
Reasons for Decision
Under section 9-5 of the GST Act, a supply is not a taxable supply to the extent that it is GST-free.
Paragraph 9-30(1)(b) of the GST Act provides that where a right is granted to receive a supply that is GST-free, the supply of that right is also GST-free.
The entity is granting a right to another entity to receive a GST-free supply of food. The supply of the food is GST-free under section 38-2 of the GST Act. Therefore, the supply of a right to receive the food is GST-free under paragraph 9-30(1)(b) of the GST Act. The supply is GST-free and as such the entity is not making a taxable supply.