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Edited version of your written advice

Authorisation Number: 1051310095672

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This notice must not be taken to imply anything about:

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

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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

Questions

    1. Is the supply of various types of fruit salads GST-free?

    2. Is the supply of fruit yogurt-puree GST-free?

Answers

    1. Yes, the supply of various types of fruit salads is GST-free.

    2. Yes, the supply of fruit yogurt-puree is GST-free.

Facts

You are registered for goods and services tax (GST). You supply various types of fruit salads and fruit yoghurt-puree. The products are refrigerated and held in large tubs.

The salads and yoghurt are not pre-packaged. On request from customers you scoop the required quantity of salad or yoghurt into a plastic container for takeaway. The prices of the products are determined by weight/quantity.

The salads and yoghurt are not marketed as prepared meals. You do not advertise the salads and yoghurt by any specific brand or name. The salads and yoghurt are not supplied for consumption on the premises from which they are supplied. The salads and yoghurt are not supplied as hot food for consumption away from the premises.

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)(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 under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded 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). The salads and fruit–yoghurt-puree are food for human consumption.

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 4 of schedule 1 operates to subject to GST, 'food marketed as a prepared meal, but not including soup'.

The classification of salads and fruit yogurt-puree depends on whether they are considered to constitute a 'prepared meal'.

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

The Macquarie Dictionary (1997) (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 of Schedule 1, the food needs to be assembled, dressed, cooked or partly cooked.

In determining whether food is marketed as a 'prepared meal' the activities of the seller are relevant. Consideration is given to the following:

    ● the name of the goods;

    ● the price of the goods;

    ● the labelling on any containers for the goods;

    ● literature or instructions packed with the goods;

    ● how the goods are packaged;

    ● how the goods are promoted or advertised; and

    ● how the goods are distributed.

Although the salads and fruit yoghurt-puree are duly assembled, dressed and ready for consumption, they are not marketed as prepared meals and as such do not fall under Item 4 of schedule 1.

The salads are not covered by any of the other items in schedule 1, nor are they excluded by the other paragraphs in section 38-3 of the GST Act. As such, the supply of all the salads and fruit yoghurt-puree is GST-free under section 38-2 of the GST Act.