GST status of food items
Food items are classified as either GST-free or taxable food.
Always check both the ‘GST-free food’ and the ‘Taxable food’ lists when working out the GST status of a food item. Even though your food item appears in the GST-free list, it may still be subject to GST under one of the taxable rules. For example, bread rolls are GST-free unless they are sold in a restaurant.
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Note: ‘food’ includes beverages or ingredients for beverages.
The following foods are GST-free:
- bread and bread rolls without a sweet coating (such as icing) or filling – a glaze is not considered a sweet coating
- cooking ingredients, such as flour, sugar, pre-mixes and cake mixes
- fats and oils for cooking
- unflavoured milk, cream, cheese and eggs
- spices, sauces and condiments
- bottled drinking water
- fruit or vegetable juice (of at least 90% by volume of juice of fruit or vegetables)
- tea and coffee (unless ready-to-drink)
- baby food and infant formula
- all meats for human consumption (except prepared meals or savoury snacks)
- fruit, vegetables, fish and soup (fresh, frozen, dried, canned or packaged)
- spreads for bread (such as honey, jam and peanut butter)
- breakfast cereals.
The following foods are taxable:
- bakery products, such as cakes, pastries, pies, sausage rolls (but not including bread and bread rolls)
- biscuits, crispbreads, crackers, cookies, pretzels, cones and wafers
- savoury snacks, confectionery, ice-cream and similar products (see Savoury snacks)
- carbonated and flavoured beverages (including flavoured milk, flavoured water and sports drinks) unless at least 90% by volume fruit or vegetable juice
- all food and beverages sold in restaurants or for consumption on the premises (see Premises)
- hot food (takeaway)
- food marketed as prepared meals and some prepared food, including platters (see Platters and similar arrangements of food)
- any food not for human consumption
- pet food or any food labelled or specified for animals.
GST in the food supply chain
GST is applied at certain stages in the food supply chain. GST is only applied where the food item is either:
- not for human consumption at a particular stage in the supply chain
- taxable under GST law.
If you are a GST-registered business, you can claim GST credits for any GST you pay in the price of food items you purchase.
You can't claim GST credits for food supplied as an 'entertainment expense' that is non-deductible for income tax.
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Example: When GST is applied in the food supply chain
A plant nursery sells punnets of lettuce seedlings to a market gardener. The seedlings are taxable as they are plants under cultivation, even though the lettuce is ultimately for human consumption. At this stage in the supply chain,:
- the plant nursery charges GST and pays it to us
- the market gardener can claim a GST credit for the GST they pay that is included in the price of the seedlings.
The market gardener then grows the lettuce, picks it and sells it to the wholesaler. The lettuce is GST-free as it is now a food for human consumption.
The wholesaler sells the lettuce, GST-free, to a retailer.
The retailer sells the lettuce GST-free to a consumer and GST-free to a restaurant.
The restaurant prepares the lettuce as part of a salad that a consumer eats on the premises. The price of the salad to the consumer is taxable. The restaurant pays the GST it charges in the price of the salad to us.
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Figure 1 shows the steps in the food supply chain and when GST applies.
Figure 1: Food supply chain