ATO Interpretative Decision
ATO ID 2004/695
Goods and Services Tax
GST and plain oriental bunsFOI status: may be released
Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 plain oriental buns?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies plain oriental buns.
Facts
The entity is a food supplier. The entity supplies plain oriental buns. The ingredients of the buns are flour, water, sugar, and yeast.
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).
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 plain oriental buns 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'. Plain oriental buns have no sweet filling or coating. Therefore, plain oriental buns are not food of a kind specified at Item 27 and are not excluded from being a GST-free supply by paragraph 38-3(1)(c) of the GST Act.
In addition, the supply of plain oriental buns does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies plain oriental buns.
Date of decision: 13 June 2002
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(c)
section 38-4
paragraph 38-4(1)(a)
Schedule 1 clause 1
Schedule 1 clause 1 table item 27
ATO ID 2002/32
Keywords
Goods and services tax
GST free
GST food
Bakery products
Food for human consumption
ISSN: 1445-2782