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Edited version of your written advice

Authorisation Number: 1051306201299

NOTICE

This edited version has been found to be misleading or incorrect.

This notice must not be taken to imply anything about:

      ● the binding nature of the private advice issued to the applicant

      ● the correctness of other edited versions.

Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.

Date of advice: 15 November 2017

Ruling

Subject: GST and classification of food products

Question at issue:

Is the supply of a salad product in a disposable individual serve plastic container, GST-free?

Facts:

      ● You have an Australian business number (ABN) and you are registered for the goods and services tax (GST).

      ● You have provided to us a document authorising your tax agent to represent you.

      ● You supply a variety of salads to outlets.

      ● You usually package your salads for distribution.

      ● You have a product which is a salad with freshly cut ingredients.

      ● Your salad product contains ingredients such as lettuce, cucumber, capsicum, tomatoes, and onion.

      ● Your salad product is put into a disposable individual serve plastic container.

      ● You have provided a sample of the container and the container is supplied with no labelling.

      ● Your salad product may be eaten either as a side dish to a main meal or as a stand alone salad meal if other ingredients are added.

      ● Your salad product is not marketed as a prepared meal.

Decision:

Yes, the supply of the salad product, in a disposable individual serve plastic container is GST-free.

Reasons for decision:

Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) requires the GST to be paid on taxable supplies.

Section 9-5 of the GST Act states that:

    You make a taxable supply if:

    (a) you make the supply for *consideration; and

    (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

    (c) the supply is *connected with Australia; and

    (d) you are *registered, or *required to be registered.

    However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

* denotes a term defined in section 195-1 of the GST Act.

You receive consideration for the goods that you provide, the supply of the goods is carried out in furtherance of your enterprise, the supplies are connected with Australia and you are registered for the GST.

However, 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, and paragraph 38-4(1)(a) of the GST Act includes food for human consumption (whether or not requiring processing or treatment).

You have advised us that the salad products, supplied in an individual serve plastic container are supplied as food for human consumption. Therefore, as food for human consumption your salad product satisfies 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1); or, is food that is a combination of one or more foods, at least one of which is food of a kind specified in Schedule 1.

The only item of relevance in this case, is item 4 in Schedule 1 (Item 4), which lists 'food marketed as a prepared meal, but not including soup'. Although the entity is supplying salad products that are ready for consumption when sold, it is the Tax Office view that salad products are not ‘of a kind’ of a prepared meal, provided that your product is not marketed as a prepared meal, as specified in the GST food guide on the Tax Office website at www.ato.gov.au

The GST food guide identifies that:

      …When determining whether food is marketed as a prepared meal you should consider how the goods are promoted or advertised. Consideration should also be given to the name, price, labelling, instructions, packaging and placement of the goods in the store.

As advised to us, you are a wholesaler and do not market your product as a prepared meal. In addition, the salad products are not covered by any other items in Schedule 1, nor do they contain any foods that are covered by the items in Schedule 1.

Accordingly, the supply of the salad product in an individual serve plastic container is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. Furthermore, the supply of the salad product does not fall within any of the other exclusions in section 38-3 of the GST Act.

For the packaging (individual serve plastic container) to be GST-free, the supply of the packaging under section 38-6 of the GST Act must be GST-free. Section 38-6 of the GST Act requires the food to be GST-free, and the packaging to be necessary for the supply of food and the packaging to be ‘of a kind’ or belong to the class of packaging in which the food is normally supplied.

Paragraph 11 of the Goods and Services Tax Determination GSTD 2000/6 provides an example which is similar to the individual serve plastic container, and determines the container to be GST-free, when supplied with GST-free food inside the container.

Accordingly, you are making a GST-free supply under section 38-2 of the GST Act when you supply your salad product, supplied in an individual serve plastic container.