Draft Practice Statement released on GST classification of food and beverage

Yesterday the Commissioner released Draft PSLA 3541: GST classification of food and beverage items.

The purpose of the draft statement is to set out the following matters:

  • the arrangement the ATO has with GS1 Australia to ensure food and beverage items shown on GS1net are correctly classified for GST purposes
  • the administrative approach the ATO will take for past years or periods where manufacturers and other suppliers have relied on the ATO confirmed GST classification for GST purposes
  • the procedures for tax officers to follow and matters to take into account when considering a change in the GST treatment of a food or beverage item listed on GST1net.

The ATO had previously entered into an arrangement with GS1 Australia, which ensured that food and beverage items were correctly classified for GST (see Fact Sheet NAT 7162.  GS1 is an organisation that administers a system of number, bar coding and electronic messaging.  GS1 numbers and barcodes are on most food and beverage items sold in retail stores.

The arrangements in the Practice Statement are intended to provide certainty and to minimise compliance costs for suppliers that rely on the GS1 net system to determine the GST classification of their products.  This certainty will be provided by the ATO undertaking that, where suppliers have relied on an ATO confirmed classification in GST1, changes to that GST classification will only be applied prospectively.  In determining this prospective date, the statement acknowledges that industry practice will generally require a minimum of 30 days from the notification of the change to implementation through the supply chain.

The ATO classification in the GS1 system does not have the legal status of a ruling.  Where a manufacturer or supplier disagrees with the classification, it can seek a private ruling, which has review rights attached.

Comments on the draft Practice Statement are invited by 13 April 2012.




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