Issue 26

Are crispbreads and ricecakes subject to GST?

For source of ATO view, refer to the Detailed food list.

This issue addresses the different GST treatment of crispbreads and ricecakes.

Clause 1, Item 32 of Schedule 1 of the A New Tax System (Goods and Services Tax) Act 1999 operates to subject the following products to GST:

"food that is, or consists principally of, biscuits, cookies, crackers, pretzels, cones or wafers"

The further explanatory memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 at paragraph 1.52 states "...The category of biscuit goods follows the WST definition except that the exclusion for crispbread has been removed. This category would tax amongst other things, dry biscuits, savoury biscuits and chocolate biscuits."

The word 'crispbread' is defined in the Macquarie Dictionary 3rd Edition as "a kind of crisp biscuit, frequently made to be low in kilojoules".

'Biscuit' is defined as

"1a a stiff, sweet mixture of flour, liquid, shortening and other ingredients, shaped into small pieces before baking or sliced after baking, b a savoury, unleavened similar mixture, rolled, sliced and baked crisp".

Clearly, crispbreads fit within item 32 and are therefore subject to GST.

By contrast, rice cakes are made principally from compressed cereal and are considered to be different from biscuits. Accordingly, they are not listed in Schedule 1 and will therefore be GST-free. Other products, similar in nature to rice cakes consisting principally of cereal, such as corn thins, will also not be subject to GST.

Additionally, Clause 5 of Schedule 1 details goods which are not considered to be biscuit goods. This includes breakfast food consisting principally of compressed, rolled or flattened cereal or rusks for infants or invalids.

Dried bread products (such as oven baked toasts, minitoasts, rusks etc) are not considered to be crispbreads. Items 20 to 27 of clause 1 of Schedule 1 lists the bakery products which are not GST-free. Specifically, item 27 relates to bread (including buns) with a sweet filling or coating. Dried bread products do not fall within the bakery products listed in items 20 to 27 nor are they considered to be biscuit goods under item 32. Therefore these products will be GST-free.

    Last modified: 05 Aug 2016QC 16451