What Food and Beverages are GST-free?

Under section 38-2 of the GST Act, a supply of food is GST-free. "Food" is defined in the Act to mean:

• Food for human consumption (whether or not requiring further processing or treatment);
• Ingredients for food for human consumption;
• Beverages for human consumption (including water);
• Ingredients for beverages for human consumption;
• Goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings); or
• Fats and oils marketed for culinary purposes.

However, food does not include:

• Live animals;
• Unprocessed cow's milk;
• 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

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

Once it has been determined that an item is "food", further consideration needs to be given to section 38-3 of the GST Act, which deems certain foods to be subject to GST (ie, food for consumption on the premises from which it is supplied, or hot food for consumption away from the premises where it is supplied).

Whether an item of food is GST-free is not always clear. For example, one would have thought that ice is considered to be food for human consumption and therefore GST-free. However, the Australian Taxation Office ("ATO") does not treat ice as item of food that is GST-free.

Water is GST-free as it is specifically included in the definition of a beverage, and by virtue of this inclusion, falls within the definition of "food". One may find it hard to comprehend that water, in its liquid form, is exempt from GST while ice (the solid form of water) is not exempt from GST. Ice is not considered to be a beverage (and hence not considered to be food), as it is not a liquid. Despite the fact that ice may be fit for human consumption, it is not considered by the ATO to be a food as it has no nourishment, no calories and no energy. Further, ice is generally used for cooling and storage purposes.