We Don't Have To Pay Gst

[philmac]

It's always a dangerous thing .... but I've been thinking.

Should we be paying GST on ingredients? In many cases there is no need to but it is up to your LHBS!

I was looking at the ATO website (I've got a sad life) and found some interesting facts. Take dextrose for
example. If the manufacturer or wholesaler sells a 250kg bag of dextrose to your LHBS and it is just labelled

ABC Ingredients Pty Ltd
26 ABC St
West Dandenong 3164

DEXTROSE

the supply will be GST free. (See this link and refer Issue No 24 Example 23)

This is because dextrose is classified as a "food" under the GST Act. Now comes the tricky bit. If the LHBS
repackages the dextrose into 1kg bags and labels it "Dextrose" the supply is still GST free. But if the LHBS
labels it in any way that suggests it is for brewing eg "Brew Enhancer" or simply puts it in a beginner's kit
with a hydrometer and fermenter it is a taxable supply and GST applies.

A quote from this ATO site

NOTE: Where a product such as sugar is sold separately and not identified as an ingredient
for making alcoholic home brew, it is GST-free. For instance, if a supplier sells sugar that is
labelled as sugar and not differentiated as 'brewer's sugar', this supply is GST-free.

So what about grain, malt extract, yeast, hops etc?

As long as grain has been modified (eg malted) and not labelled as "Beer Grain" or "Pilsener Malt" but
simply as "Pale" or "Crystal" malt, no GST is payable. Malt extract is treated the same way.

If yeast is specified as a brewing yeast (even just a photo of a glass of beer on the package), GST is payable.
But because yeast can be used to make bread, if there is no "brew related" packaging the supply should be
GST free.

The supplier is under no obligation to find out what you want the ingredient for. If all packaging is generic,
and there is a 'food' or 'beverage' use for the ingredient, then GST need not apply.

I'm no accountant but it seems to me that an enterprising supplier could help the brewing community to the
tune of one eleventh of the cost of many ingredients by being careful with packaging.

What do you reckon?

Cheers,
Phil

 

[Tony M]

The problem then is that the poor buggr then has to spend twice as long on his accounts at the end of the month to do his suddenly complicated return

 

[bugwan]

A fantastic find Philmac! We could effectively dodge not just GST, but taxes on alcohol by home brewing! This has renewed my faith in the tax system... (to a degree)

Now, which HBS are going to be willing to do this? Not many I'd imagine, as pointed out by Tony M, it sounds like more paperwork...

EDIT: This quote from the ATO: "the sale of sugar that is packaged, labelled and sold for use in making alcoholic home brew is not a GST-free supply under section 38-2 of the GST Act" doesn't bode well really. I doubt a HBS would like to get themselves caught up in tax fraud to save their punters a few bob... Oh well.

 

[MHB]

I charge GST on everything I sell. Because my suppliers do in fact charge GST on everything I buy, including bulk sugars.
They do this because they were told to by the ATO.

MHB

 

[RobboMC]

Does anyone know anyone that buys dextrose from a HBS for making cakes?
I doubt it.
If it comes out of the door of a HBS, chances are pretty good it's for making beer! Or am I just plain dumb?

 

[philmac]

Does anyone know anyone that buys dextrose from a HBS for making cakes?
I doubt it.
If it comes out of the door of a HBS, chances are pretty good it's for making beer! Or am I just plain dumb?

RobboMC, that is the point though. It doesn't matter what it is going to be used for. The supplier is under no
obligation to find out either. It all comes down to the packaging. Label it "For Home Brew Use" and it is
taxable. Label it "Sugar" or "Dextrose" or "Malt Extract" and there is no need to charge GST.

Whether or not it IS charged is another thing. Just ask MHB's suppliers.

Just more food for thought.

Cheers,
Phil

 

[MHB]

The point is intent.

If I have reason to believe that the product will be used for a taxable purpose I must charge, look at the penalties do you think I or anyone else is going to take the risk so you can save 30 cents.

Home Brewing is a multi million dollar industry, we do employ the odd accountant and like most Australians try not to pay any tax we dont have to. This question has been looked at repeatedly and the answer is the tax stays.

MHB

 

[wessmith]

Phil mate, this is a very old debate that those of us in the industry went round in circles on back in 2000. The ATO made it very simple - if you are selling into the brewing industry, and that includes homebrewing, then everything attracts GST. It is up to the manufacturers, wholesalers and retailers to determine whether the end use is for food production or not. Many HBS received letters from ATO alerting them to the fact that all supplies for brewing attract GST in that first year of GST.

And if you stop and think about it, everything attracts GST except some food items (and a handfull of other spoecial cases) and while we might like to all argue the toss, beer is not a pimary food - sadly...

Wes

 

[ausdb]

And if you stop and think about it, everything attracts GST except some food items (and a handfull of other spoecial cases) and while we might like to all argue the toss, beer is not a pimary food - sadly...

Maybe it should be officially renamed Liquid Bread like the monks used to call it

 

[philmac]

Hi MHB & Wes,

I don't mean to sound contrary (feel a bit like Darren here ) and I understand that this debate may have
been had back when the GST was about to be (and after it was) introduced.

That doesn't really change the fact that in the ATO's own documentation it states -

There is no requirement for the supplier to ascertain how the purchaser will use the product
The GST status of the product depends on whether it is a supply of food for human consumption as defined in the Act.

Link to quote near the top of the page.

It's a bit like the butcher who sells bones. If he marks them "soup bones" they don't attract GST, if he marks
them "dog bones" they do. If he just labels them "bones" there is no GST. Same bones though.

Cheers,
Phil

 

[MHB]

Mate you asked the question you got the right answer if you keep going I might have to agree with 1 part of your last post.

We have had clear direction given to us by the ATO, go argue with them. Go to Woollies, Coles or bi-lo, see if it shows GST free on their docket.

The fact is I have to pay GST and so do you.

MHB

 

[warrenlw63]

Philmac

Couple of things in life are ineviatable even if most of us don't like it.

Death and Taxes.

If it doesn't work for you. Work your way up to Canberra and do something about it. Otherwise just suffer the consequences like the rest of us. If it bothers you unusually don't make beer. :lol:

Warren -

 

[philmac]

Point taken boys,

Sometimes I do try to reinvent the wheel.

But what if ................. (only joking )

Heres to beers & goodnight,
Phil

 

[Ross]

Go to Woollies, Coles or bi-lo, see if it shows GST free on their docket.

The fact is I have to pay GST and so do you.
MHB

Mark,

Woollies, Coles etc DO show GST free on their dockets - Out latest supermarket bill for $253 shows only GST of $7.92.

Also, you don't pay GST as such on the shop products you sell - ALL GST you pay out, you claim back & ALL GST you collect, you pay back. So GST really has zero effect on you, only on your customers.
Therefore it makes no difference to you at all, whether your suppliers charge you GST or not.

I'm not arguing whether sugar etc should or could be GST free in a HBS, but it certainly is in a supermarket.

Cheers Ross

 

[Mr Bond]

GST,Shmee s tee.

10% on the raw ingredients to make my beers is far better than the excessive taxes that fed and local(state) governments place on alchohol products from retail outlet.
GST is old news.

 

[Gough]

Go to Woollies, Coles or bi-lo, see if it shows GST free on their docket.

The fact is I have to pay GST and so do you.
MHB

Mark,

Woollies, Coles etc DO show GST free on their dockets - Out latest supermarket bill for $253 shows only GST of $7.92.

Also, you don't pay GST as such on the shop products you sell - ALL GST you pay out, you claim back & ALL GST you collect, you pay back. So GST really has zero effect on you, only on your customers.
Therefore it makes no difference to you at all, whether your suppliers charge you GST or not.

I'm not arguing whether sugar etc should or could be GST free in a HBS, but it certainly is in a supermarket.

Cheers Ross

G'day Ross,

You are correct that a supermarket docket is detailed in that way. I think though (and perhaps we need someone to actually conduct this experiment) if you bought a kilo of dextrose from the homebrew section in the supermarket for example, it would indeed attract GST and be labelled as such on your docket. A kilo of table sugar from the table sugar section would not. Yes it is arbitrary, but such is the system... I think :blink:

Shawn.

 

[Tony]

I work for a company that once produced dextrose.

Ahhh i mess the days or getting a 25 KG bag hot off the packer and chucking it in the ute

We now import it.

The public used to be able to come to the factory and buy a bag of dex for $32

I have notices a sign on the front door of the factory office that says...... all dextrose sales now through miter 10.

At miter 10 they have 25KG bags of dextrose in our compamy logo bags on the floor for sale.

I will ring them tomorrow and ask them if they charge GST on them.

cheers

 

[stephen]

Regarding GST I have in front me a receipt from Bi-Lo purchasing the following products:

Coopers Dry Light Malt $5.19
Bacon pack $6.99
Bulk pack mince $11.79

GST included in total was $0.47. Do your maths on the prices quoted above (ie. divide by eleven) and it is quite plane that I paid GST on the Coopers dry malt.

Regards

Steve

 

[MHB]

Ross
Admittedly I rarely buy my Home Brew supplies at supermarkets; I think we should all support our LHBS.
However about a third of the items you bought did have a GST component.
If your supermarket isnt charging GST then they will be facing a very hefty bill.

As to GST having no effect on a business, if you are not just trying to stir the pot, I hope you have a really, really good accountant.

MHB

 

[Tony]

I think he does mark.