| Disclaimer This edited version will be removed from the Database after 30 September 2025. If you believe the issues detailed in this edited version warrant retention in an alternative form, email publicguidance@ato.gov.au This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011499035949
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Food classification
Question
How do I calculate the goods and service tax (GST) applicable to our supplies of food?
Answer
In order to calculate the GST to be remitted to the Australian Taxation Office (ATO) you need to establish the taxable portion you supply and remit GST of one eleventh of the consideration received for the taxable portion.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are registered for GST.
You operate as a retail food supplier to end consumers who receive weekly packages of food.
Reasons for decision
From the list you provided, we have established that you provide 'mixed supplies' which means some of the products are taxable and some are GST-free. Therefore, it is necessary for you to apportion the taxable and GST-free components in order to calculate the GST payable.
Goods and Services Tax Ruling GSTR 2001/8 (GSTR 2001/8) discusses apportionment of GST on mixed supplies. Paragraphs 28 and 29 of GSTR 2001/8 state::
28. The amount of GST payable on a taxable supply is 10% of the value of the taxable supply. The application of sections 9-70, 9-75 and 9-80 to a mixed supply gives an amount of GST payable of 10% of the value of the taxable part of the mixed supply.
29. To work out the value of the taxable part of a mixed supply, you identify the parts of the supply and apportion the consideration to each of the parts. The value of the taxable part is 10/11 of the consideration for the taxable part, and the GST payable is equivalent to 1/11 of that consideration.
I have enclosed a copy of GSTR 2001/8 which discusses some of the different methods accepted by the ATO for apportioning mixed supplies.
In order for you to apportion your mixed supplies we have classified your products with regard to their taxable or GST-free status in accordance with GST Act.
Section 38-2 of the GST Act states 'A supply of *food is GST-free.'.
However, section 38-3 of the GST Act describes food that is not GST-free and refers to Schedule 1 of the GST Act.
Schedule 2 of the GST Act describes beverages and ingredients for beverages that are GST-free.
Item 4 of Schedule 1 of the GST Act ensures food marketed as a prepared meal, not including soup, cannot be GST-free. A prepared meal is something that is capable of being a meal in itself. To be a prepared meal, a fish fillet would normally need to be accompanied by chips, salad, vegetables, rice or pasta. The mere addition of a sauce will not normally have the effect of converting a fish fillet into a prepared meal to which item 4 applies unless the fish and the sauce together form a meal in themselves. For example, fish fillets that are sold with only a coating of sauce or a sauce marinade are not prepared meals. To be a prepared meal, fish fillets must be either marketed as a prepared meal or they must directly compete with takeaways or restaurants. In practical terms this means they would be accompanied by chips, salad, pasta, rice or vegetables for example.
The GST food guide has been based on the above provisions, is available on the ATO website and has been used for reference to classify your products.
Further issues for you to consider
After referring to GSTR 2001/8,if you are still unsure whether your method of apportionment is appropriate you can provide specific details of the method you propose to use and apply for a further GST ruling to confirm it is acceptable to the ATO.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
