ATO Interpretative Decision
ATO ID 2008/132
Goods and Services Tax
GST and pizza/Italian rollsFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 pizza rolls / Italian rolls?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies pizza rolls / Italian rolls.
Facts
The entity is a food supplier. The entity supplies food products known as pizza rolls / Italian rolls.
The pizza rolls / Italian rolls form part of the savoury roll product range which includes cheese topped rolls and cheese and bacon rolls.
These products are baked and supplied daily by the entity in addition to other bread products. They are not supplied for consumption on the premises.
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 paragraph 38-4(1)(a) of the GST Act to include food for human consumption (whether or not requiring processing or treatment). The pizza rolls / Italian rolls are food for human consumption and, therefore, satisfy the definition of food in paragraph 38-4(1)(a).
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). Item 3 of Schedule 1 (Item 3) covers pizza, pizza subs, pizza pockets and similar food which are described as prepared food. The question at issue is whether pizza rolls / Italian rolls are similar food to these products and therefore subject to GST. The Tax Office, in consultation with relevant industry bodies, has considered this issue and has identified three common characteristics of pizza, pizza subs and pizza pockets.
Common Characteristics of Pizzas, Pizza Subs and Pizza Pockets
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- Pizza, pizza subs and pizza pockets are designed to be ready to eat, and do not require the addition of fillings or further toppings and ingredients. Unlike bread rolls, they are generally not capable of being cut and filled.
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- Pizza, pizza subs and pizza pockets are prepared using a dough base that generally has a higher percentage of oil, and a lower percentage of yeast, than traditional bread dough. This dough base is sometimes referred to as 'pizza dough'.
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- The filling or topping of pizza, pizza subs or pizza pockets is significant in relation to the whole. As a general rule of thumb, significant is considered to be 30% or more, by depth of the topping, as compared with the depth of the whole product.
A food product, which is not identical to pizza, pizza subs or pizza pockets, may be covered under Item 3 as 'similar food', if it is food for human consumption that has a general likeness or resemblance to pizza, pizza subs and pizza pockets. To be considered 'similar food', a product should have all of the three common characteristics of pizza, pizza subs and pizza pockets, as listed above.
The pizza rolls / Italian rolls are capable of being cut and filled, have a traditional bread dough base and have a topping of less than 30% compared with the depth of the whole product. The rolls do not share any of the three characteristics as listed above. It is considered that they are not food of a kind specified in Schedule 1.
In addition, the supply by the entity of the pizza rolls / Italian rolls 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.
Date of decision: 26 August 2008
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, item 3
Other References:
Policy paper: GST classification of similar food to pizza, pizza subs and pizza pockets (2008).
Keywords
Bakery products
Food for human consumption
Goods and services tax
GST food
ISSN: 1445-2782
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