Further Supplementary Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Chapter 4 - Input taxing of school tuckshops and canteens - Subdivision 40-E
4.1 The amendments insert new Subdivision 40-E into the A New Tax System (Goods and Services Tax) Bill 1998 (the Bill). The Subdivision allows tuckshops run by a non-profit body at a primary or secondary school to choose to be input taxed if they satisfy certain conditions.
4.2 The amendments will lessen the compliance costs and make accounting for GST easier for the bodies running school tuckshops and canteens. The amendments will relieve these bodies from the paperwork of having to charge GST or collect input tax credits.
4.3 The amendments will also mean that tuckshop revenue can be excluded from the annual turnover for the GST registration threshold. Therefore, very few non-profit associations such as a Parent and Citizens association or Parents and Friends association would be over the $100,000 registration threshold.
4.4 The amendments will apply from 1 July 2000.
4.5 Under the Bill, food for human consumption is GST-free, except for:
- savoury snacks, confectionery, ice-cream food, biscuits and certain beverages;
- bakery products other than bread; and
- prepared meals, takeaway foods and food supplied by restaurants.
4.6 Without this amendment, school tuckshops and canteens registered for GST will be required to charge GST on most supplies of food (see Chapter1 for the GST treatment of food). For example, potato chips, sausage rolls, meat pies and sandwiches supplied by the school canteen or tuckshop will be subject to GST. However, some food, such as fresh fruit, will be GST-free.
4.7 New subsection 40-130(1) allows non-profit bodies to choose to input tax supplies of food made through a school tuckshop or canteen run by them. For example, the supply of food through the tuckshop where the tuckshop is run by a Parents and Citizens association, Parent and Friends association or some other similar association.
4.8 The non-profit body may choose whether to be input taxed, or to apply the general GST rules, on supplies of food that it makes. Where the non-profit body chooses to be input taxed, no GST will be payable on any supplies of food and the body is not entitled to claim input tax credits.
4.9 A choice cannot be made under new Subdivision40-E if the non-profit body supplies something other than food through the school canteen or tuckshop [new paragraph 40-130(2)(a)] . For example, a school tuckshop that sells school books and uniforms as well as food would not be able to choose to be input taxed.
4.10 A non-profit body that makes a choice under new Subdivision40-E , must treat all supplies of food through the school tuckshop or canteen in the same way [new paragraph 40-130(1)(b)] . Once a choice is made to treat all supplies of food as either input taxed or subject to the general GST rules, the non-profit body cannot change the choice for 12 months [new paragraphs 40-130(2)(b) and (c)] .
4.11 Where a primary or secondary school supplies food to boarding students of the school as part of their board, the supplies will be subject to the general GST rules. [New subsection 40-130(3)]