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Edited version of your private ruling

Authorisation Number: 1012262586436

Ruling

Subject: Food classification

Question

Is the supply of the food product GST-free?

Answer

Yes

Relevant facts:

You are registered for goods and services tax (GST).

You carry on an enterprise of supplying food.

You advised that the food is not a prepared meal and is sold with a serving suggestion to add other food components before consumption.

The food is not designed to compete with takeaways and restaurants.

The food must be kept chill or refrigerated.

The food packaging promotes the food as cooked in sauce.

Reasons for decision

Food is defined in section 38-4 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Under section 38-2 of the GST Act a supply of food is GST-free. However, food that is described in section 38-3 of the GST Act is not a GST-free.

The term food is defined in section 38-4 of the GST Act and includes food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). In this case the cooked meat in sauce is food for human consumption. Next we need to consider whether the food is a type of food described in subsection 38-3(1) of the GST Act.

Subsection 38-3(1) of the GST Act provides that a supply of food is not GST-free if it is a supply of, amongst other things:

Based on the information provided, the food is not food for consumption on the premises from which they are supplied. The food is not sold as hot food for consumption away from those premises as the food must be kept chill or refrigerated.

Therefore we need to determine whether the food is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Food listed under an item in Schedule 1 is not excluded from being GST-free by section 38-3 of the GST Act.

Items 1 to 7 in Schedule 1 relate to prepared food and are intended to cover food that directly compete against takeaways and restaurant food. We consider item 4 of Schedule 1 (Item 4) may be relevant to the food as item 4 is about food marketed as prepared meal, but not including soup.

When considering food under Item 4 we need to consider conditions outlined in clauses 2 and 3 of Schedule 1 of the GST Act. Clause 2 of Schedule 1 provides when considering food under items 1 to 7, it does not matter whether the food is sold hot, cold or frozen or requires cooking, heating, thawing or chilling prior to consumption. Clause 3 of Schedule 1 provides that Item 4 only applies to food that requires refrigeration or freezing for its storage.

Prepared Meals

The term 'prepared meal 'referred to in Item 4 is not defined in the GST Act and therefore takes its ordinary meaning.

'Meal' is defined in The Macquarie Concise Dictionary, 2001, revised 3rd edition Macquarie Library Pty Ltd NSW (Macquarie Dictionary) as:

This definition could be applied to a single food item or to a meal consisting of several food items.

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

The Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (the EM) provides that the term 'prepared meal' is intended to cover a range of food products that:

Included in this category (according to the EM at paragraph 1.33) are things such as:

prepared meals such as curry and rice dishes, mornay's and similar dishes sold cold by a take-away or supermarket that only need reheating to be ready for consumption

Paragraph 1.34 of the EM provides examples of food items that are not considered to be prepared meals:

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

The Australian Taxation Office's (ATO) view on prepared meal is outlined in the ruling Goods and Services Tax Industry Issue - Food and Industry Partnership - Prepared Food. There is more information on food classification in the ruling Goods and Services Tax Industry Issue - Food and Industry Partnership - Detailed Food Lists (Detailed Food Lists). You may download these ruling from the ATO websites www.ato.gov.au.

Below is an extract from the Detailed Food Lists ruling and it outlines the GST status of meals. It explains the meaning on "prepared meal" where item 4 will apply.

curry (without rice or other accompaniment, that is

not marketed as a prepared meal)

GST free

Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. Schedule 1, item 4 of the GST Act does not apply to a curry

that is supplied with a serving suggestion to add rice (or other accompaniments) before consumption.

curry and rice dishes that: directly competes with takeaways and restaurants, needs refrigeration or

freezing for its storage and is marketed as a prepared meal

taxable

Schedule 1, item 4 of the GST Act applies.

prepared meal that: directly competes with takeaways and restaurants, needs refrigeration or

freezing for its storage and is marketed as a

prepared meal

taxable

Schedule 1, item 4 of the GST Act applies. Examples include: curry and rice, mornays, seafood in sauce with pasta and/or vegetables, fresh or frozen prepared lasagne, sushi, cooked pasta dishes complete with sauce, frozen TV dinners, fresh or frozen complete meals that include meat and vegetables and low fat dietary meals. These types of meals are usually packaged in a container from which they can be eaten.

prepared product that requires assembling before consumption

GST free

Exclusion at Item 4, Schedule 1 does not apply. Examples include: a curry or casserole with rice in individual packages that are heated separately

and combined before consumption, meat or seafood in sauce with a serving suggestion to add rice/pasta and/or vegetables before consumption, products that require the consumer to cook and add meat to complete them. These types of meals are not packaged in a container from which they can be eaten and components need to be

assembled on a plate prior to consumption or the product needs to be combined with other ingredients prepared by the consumer prior to

consumption.

Item 4 will apply to prepared meals such as curry with rice or seafood in sauce with pasta and/or vegetables or fresh or frozen meals that include meat and vegetables packed in a container from which they can be eaten.

Item 4 does not apply to meals such as a serve of curry or casserole and it is recommended that the consumer add other components such as rice, noodles or vegetables to the meals before consumption. The food product may contain a serve of meat or seafood in sauce with serving suggestions to add rice, noodles or vegetables prior to consumption. The meals are generally not packed in a container with the rice or vegetables from which they can be eaten. The meals and rice/vegetables need to be assembled by the consumer prior to consumption

Your food products are supplied without other food accompaniments. The food contains cooked meat in sauces only and is not marketed as a prepared meal. The food packaging suggests serving suggestion to add other food components before consumption. Therefore the food products are not a prepared meal under item 4 and therefore not food of a kind listed in Schedule 1. The food products are not excluded from being GST free by section 38-3 of the GST Act.

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