ATO Interpretative Decision

ATO ID 2002/118

Goods and Services Tax

• 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 filo pastries with savoury vegetarian fillings?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies filo pastries with savoury vegetarian fillings. 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 uncooked frozen filo pastries with savoury vegetarian fillings. The filo pastries with savoury vegetarian fillings may contain either spinach, mushroom or sprout fillings and come in round, triangular and log shapes.

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 provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.

Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a) of the GST Act). The filo pastries with savoury vegetarian fillings are food for human consumption, and therefore, satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that 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 25 of Schedule 1 (Item 25) provides that 'pastizzi, calzoni and brioche' are not GST-free. Therefore, it must be determined whether the filo pastries with savoury vegetarian fillings are a kind of pastizzi, calzoni or brioche.

The phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary (1997) does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean:

'1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4 ...'

Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question.

The term 'pastizzi' is not defined in The Macquarie Dictionary (1997). However, the general meaning of the term provided by culinary reference books is that a pastizzi is a traditional Maltese pastry that is boat shaped and contains a variety of fillings. A pastizzi is made of puff pastry and traditionally is filled with ricotta cheese. However, a pastizzi may also contain various other fillings and is baked. The filo pastries with vegetarian savoury fillings are considered to be food that is of a kind of pastizzi.

Clause 2 of Schedule 1 of the GST Act (Clause 2) operates to ensure that foods listed at Item 25 are not GST-free regardless of whether they are supplied hot or cold, or require cooking, heating, thawing or chilling prior to consumption. Therefore, even though the filo pastries with vegetarian savoury fillings are raw and frozen they are still food of a kind listed in Schedule 1. Thus, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies filo pastries with vegetarian savoury fillings.

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 Division 38 of the GST Act nor 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 filo pastries with vegetarian savoury fillings.

Amendment History

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)
   paragraph 38-4(1)(a)
   Division 40
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 25
   Schedule 1 clause 2

Case References:
Hygienic Lily Ltd v. Deputy Commissioner of Taxation (NSW)
   18 ATR 619
   (1987) 13 FCR 396
   (1987) 71 ALR 441
   87 ATC 4327

Other References:
The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales

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

Siebel/TDMS Reference Number:  CW232937

Business Line:  Indirect Tax

Date of publication:  31 January 2002
Date reviewed:  1 September 2022

ISSN: 1445-2782