ATO Interpretative Decision
ATO ID 2004/709
Goods and Services Tax
GST and oriental buns with sweet fillingFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies oriental buns with a sweet filling?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies oriental buns with a sweet filling as buns with a sweet filling are specifically excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. The entity supplies oriental buns with a sweet filling. The ingredients of the buns are flour, water, sugar, and yeast. The ingredients of the filling are beans, sugar and oil.
The product is not sold hot and is not for consumption on the premises from which it is supplied.
The entity is registered for goods and services tax (GST) and the supply of the oriental buns with sweet filling satisfies the other positive limbs of section 9-5 of the GST Act.
Reasons for Decision
A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded from being GST-free by section 38-3 of the GST Act.
Food is defined in section 38-4 of the GST Act to include food for human consumption (whether or not requiring processing or treatment)(paragraph 38-4(1)(a) of the GST Act). As they are food for human consumption, oriental buns with a sweet filling satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.
However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Item 27 in Schedule 1 (Item 27) specifies 'bread (including buns) with a sweet filling or coating'. The filling in the oriental buns is a sweet mixture of beans, sugar and oil. As the oriental buns have a sweet filling they are food of a kind specified at Item 27 and are excluded from being a GST-free supply by paragraph 38-3(1)(c) of the GST Act. Therefore, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies oriental buns with sweet filling.
The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply of oriental buns with sweet filling is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the supply of oriental buns with sweet filling is a taxable supply under section 9-5 of the GST Act.
Date of decision: 13 June 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
Section 9-5
Division 38
section 38-2
section 38-3
paragraph 38-3(1)(c)
section 38-4
paragraph
Division 40
Schedule 1 clause 1
Schedule 1 clause 1 table item 27
Keywords
Goods and services tax
GST food
Bakery products
Food for human consumption
Taxable supply
ISSN: 1445-2782