ATO Interpretative Decision

ATO ID 2004/395 (Withdrawn)

Goods and Services Tax

• Withdrawn. The ATO view for this issue is covered in the GST food guide - Section 3 - Detailed food list.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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 deep-fried pita bread pieces?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies deep-fried pita bread pieces.

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 pita bread that has been cut into pieces and deep-fried to achieve a crisp texture. The deep-fried pita bread pieces resemble thin chips. The product may be eaten on its own, used in dips or as croutons in salads.

The entity is registered for goods and services tax (GST). The supply 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). Deep-fried pita bread pieces are food for human consumption and therefore, 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). Deep-fried pita bread pieces are not specifically listed in Schedule 1. However, item 18 of Schedule 1 (Item 18) specifies food similar to that covered by item 15 of Schedule 1 (Item 15) or item 16 (Item 16) of Schedule 1, whether or not it consists wholly or partly of any vegetable, herb, fruit, meat, seafood or dairy product or extract and whether or not it is artificially flavoured.

To be covered by Item 18, a food needs only to be similar to food that is covered by either Item 15 or Item 16. Item 15 specifies potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips. The foods listed in Item 15 are foods that have undergone a cooking process and share certain characteristics such as crispness.

The pita bread pieces are deep-fried to achieve a crisp texture. Once fried, the product resembles thin chips. Accordingly, the deep-fried pita bread pieces are food of a kind that is similar to the foods listed in Item 15. The deep-fried pita bread pieces are food of a kind covered by Item 18 and are excluded from being GST-free by paragraph 38-(1)(c) of the GST Act.

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 is neither GST-free under any other provision of Division 38 of the GST Act nor is it input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies deep-fried pita bread pieces.

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 38-4(1)(a)
   Division 40
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 15
   Schedule 1 clause 1 table item 16
   Schedule 1 clause 1 table item 18

Keywords
Goods and services tax
GST free
GST food
Food for human consumption
GST supplies & acquisitions
GST supply
Taxable supply

Business Line:  GST

Date of publication:  7 May 2004

ISSN: 1445-2782