GST and food for small business
What is GST?
The goods and services tax (GST) is a tax of 10% on most goods and services sold or consumed in Australia. If you run a business, you need to know about GST.
If you are registered, or required to be registered for GST:
- include GST in the price of taxable sales to your customers
- don’t include GST in the price if your sales are ‘GST-free‘ or ‘input taxed‘
- generally, you can claim credits for the GST included in the price of purchases for your business if the purchases are for making GST-free or taxable sales.
GST and food
If you sell food in your business, you need to know which items to charge GST on.
Not all food sales are taxable sales. Some food sales are GST-free. You don't include GST in the price of food sales that are GST-free.
Examples of 'GST-free' foods and drinks are:
- bread and bread rolls without a sweet coating or filling
- cooking ingredients such as flour, sugar and cake mixes
- fats and oils for cooking
- unflavoured milk, cream, cheese and eggs
- spices and sauces
- fruit or vegetable juice containing at least 90% by volume of juice of fruit or vegetables
- bottled drinking water
- tea and coffee (unless it's ready to drink)
- baby food and infant formula (for children under 12 months of age)
- meats for people to eat (except prepared meals or snacks)
- fruit, vegetables, fish and soup (but not hot soup)
- spreads, such as honey, jam and peanut butter
- breakfast cereals
Even though your item may be GST-free, it may still be taxable under some circumstances. For example, bread rolls are GST-free unless you sell them in a restaurant and your customers eat them at the restaurant.
Examples of 'taxable foods and drinks' are:
- bakery products such as cakes, pastries and pies
- biscuits, crispbread, crackers, pretzels, cones and wafers
- savoury snacks such as potato chips
- confectionary including chocolates, lollies and muesli bars
- ice cream and similar products
- soft drinks and flavoured milk such as chocolate milk
- food platters
- food marketed as prepared meals such as sushi, curry and rice dishes
- all food and beverages consumed on the premises where they are sold, for example, restaurants and cafés
- all hot food sold as take-away
- food that is not for human consumption, for example pet food
- food that is or is similar to the food specifically listed in the GST law as being taxable
- drinks and ingredients for drinks that are not listed in the GST law as being GST-free
- products that are not considered food under the GST law until they are processed or treated. These include:
- live animals other than crustaceans or molluscs
- unprocessed and untreated grain, cereal or sugarcane
- living plants (eg a lettuce seedling or potted herb)
GST and the food supply chain
GST is applied at certain stages in the food supply chain. GST is applied where at the time of the supply the product is either:
- not for human consumption at that particular stage in the supply chain, or
- taxable under GST law.
If you are a GST-registered business, you can claim 'GST credits' for any GST paid in the price of food purchased for your business.
You cannot claim GST credits for food supplied as an 'entertainment expense' if you cannot claim an income tax deduction for it.
Example: When is GST applied in the food supply chain?
A plant nursery sells lettuce seedlings to a GST registered market gardener. The seedlings are taxable sales as they are plants under cultivation.
The plant nursery charges GST to the customer and pays that to us.
The market gardener can claim a GST credit for the GST included in the price paid for the seedlings.
The market gardener grows the lettuce, picks it and sells it to a vegetable wholesaler. The sale of the lettuce by the market gardener is GST-free as it is now a food for human consumption and the sale is not taxable.
The vegetable wholesaler sells the lettuce GST-free to a supermarket.
The supermarket sells the lettuce GST-free to the customer.
End of example
Where food is sold and consumed affects GST
All food and drinks sold for consumption at the place where the sale takes place are taxable sales. This means the price that you charge to your customers for the food and drinks includes GST, and you must pay that GST to us if you sell food and drinks at places such as:
- restaurants or cafes, snack bars or stands, hotels, clubs, boats, catered functions and the grounds surrounding such places
- venues associated with leisure, sport or entertainment, such as
- sports grounds
- a golf course
- amusement parks.
In some cases charitable institutions, charitable funds, gift deductible entities and government schools (for example, tuckshops) that sell food for fundraising or something similar do not charge GST.
Anh sells bread and plain bread rolls at her bakery, without sweet fillings or coatings. She sells the bread to her customers with the intent they will eat it elsewhere.
She doesn't need to charge her customers GST.
Iman sells plain bread rolls at his restaurant. These are served in the restaurant and intended to be eaten there.
Iman charges GST to his customers and he pays this GST to us.
Ali's coffee van
Ali runs a mobile coffee business. He drives his van to various festivals and events. He sells drinks such as tea, coffee and hot chocolate. He also sells bottled water. The tea, coffee and hot chocolate are taxable as these are 'ready to drink'. The bottled water is also taxable as it's sold with the intention that customers will drink it at the event.
Ali charges GST to his customers and he pays this GST to us.
Haruka's juice bar
Haruka runs a juice bar at a food court. She sells 100% fruit juice, smoothies and bottled water, all are taxable as they are intended to be drunk at the food court.
Haruka charges GST to her customers and pays this GST to us.
End of example
For more information:
Helping small business operators from non-English speaking backgrounds understand what food is GST-free and what is taxable.
- visit our website at
- the Translating and Interpreting Service (TIS) on 13 14 50
- 13 28 66 between 8.00am and 6.00pm, Monday to Friday
- visit us
- speak to your tax or BAS agent.