GST and the supply of mixed fruit with glace cherries

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 supplies mixed dried fruit with glacé cherries?

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies mixed dried fruit with glace cherries. The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a food supplier. The entity supplies mixed dried fruit with glace cherries.

The product is a mixture of dried fruit and glace cherries that is used predominantly to make fruit cakes and puddings. The mixture consists of sultanas, currants, raisins, candied peel and glace cherries with dressing oil. The dried fruits and glace cherries in the mixture retain their separate identities as sultanas, candied peel, currants, raisins and glace cherries.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded by section 38-3 of the GST Act.

Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a) of the GST Act). Sultanas, currants, raisins, candied peel and glace cherries are food. Therefore, a mixture of these products satisfies the definition of food contained in paragraph 38-4(1)(a) 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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind.

As the dried fruits and glace cherries in the mixture retain their separate identities, they are a combination of foods. Therefore it is necessary to consider whether one or more of those foods is food of a kind specified in Schedule 1.

Sultanas, currants and raisins are not food of a kind specified in Schedule 1. Item 12 in Schedule 1 (Item 12) specifies 'crystallised fruit, glace fruit and drained fruit'. Although the candied peel could be considered to be similar to crystallised fruit, clause 4 of Schedule 1 provides that none of the items in the table relating to the category of confectionery includes candied peel. However, as the glace cherries are glace fruit, they are food of a kind specified in Item 12.

Therefore, the mixed dried fruit with glace cherries is a combination of foods, one of which (the glace cherries) is food of a kind specified in Schedule 1. This means that the supply of the mixed dried fruit is not GST-free due to the operation of paragraph 38-3(1)(c) of the GST Act.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision of Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies mixed dried fruit with glace cherries.