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Edited version of your written advice

Authorisation Number: 1051310084148

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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: 27 November 2017

Ruling

Subject: GST and food

Question

What is the GST status of the listed salads?

Answer

All the salads listed are GST-free.

Facts

You are a franchisor currently looking to introduce the above mentioned salads into convenience stores of your franchisees. Each of these salads will be supplied in particular weight packages. The salads are to be made available for customer purchase through open faced deli cabinets. You see the salads as either a take home product or a salad to be eaten immediately upon purchase. The salads are not sold for consumption on the premises from which they are supplied.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-2.

A New Tax System (Goods and Services Tax) Act 1999 section 38-3.

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(a).

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(c).

A New Tax System (Goods and Services Tax) Act 1999 section 38-4.

A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 4.

Reasons for decision

A supply of food is GST-free in accordance with section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The term 'food' is defined in paragraph 38-4 (1)(a) of the GST Act as 'food for human consumption (whether or not requiring processing or treatment);'. The salads listed satisfy this definition of food.

Subsection 38-3(1) of the GST Act excludes certain foods from GST-free status. These include:

    ● food for consumption on the premises from which it is supplied; and

    ● food of a kind specified in the third column of the table in clause 1 of Schedule 1.

You say the salads are not sold for consumption on the premises from which they are supplied. You see the salads as either a take home product or to be eaten immediately upon purchase. As such the salads are not food for consumption on the premises from which these are supplied.

Item 4 in the table in clause 1 of Schedule 1 to the GST Act (item 4) operates to subject to GST, 'food marketed as a prepared meal, but not including soup'.

The classification of salads depends on whether they are considered to constitute a 'prepared meal'.

Paragraph 1.16 of The Further Explanatory Memorandum relating to the A New Tax System (Goods and Services Tax) Bill 1998 (EM) provides that the food that falls into the category of restaurant, take-away and prepared food is not GST-free.

Paragraph 1.31 of the EM states:

    The category of prepared food as listed in new Schedule 1A is intended to cover a range of food products that directly compete against take-aways and restaurants. These products will always be taxable. It does not matter whether they:

    ● are sold hot, cold or frozen; or

    ● require any cooking, heating, thawing or chilling before consumption;

The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning.

The Macquarie Dictionary, 3rd edn (the dictionary) defines the term 'meal' as 'the food eaten or served for a repast'. This definition could be applied to a single food item or to a meal consisting of several food items.

The dictionary defines 'prepare' in relation to food as 'to get ready for eating, as a meal, by due assembling, dressing or cooking'.

Therefore, for food to be regarded as a 'prepared meal' under item 4, the food needs to be assembled, dressed, cooked or partly cooked.

Although, the salads are duly assembled, dressed and ready for consumption they are not marketed as prepared meals and as such do not fall under item 4.

Therefore, the salads are neither marketed as prepared meals, nor are they sold for consumption on the premises from which these are supplied. As such all the salads listed are GST-free.