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Edited version of your private ruling
Authorisation Number: 1012562297996
Ruling
Subject: GST and food
Question
Is your sale of the two products subject to goods and services tax (GST)?
Answer
Yes.
Relevant facts and circumstances
· You are registered for GST.
· You sell to retail outlets two products.
· Both products are a pastry filled with a savoury filling.
· Cooking instructions supplied with the products require each product to be deep fried or oven baked.
· Both products are sold frozen.
· None of the products are marketed or sold as prepared meals.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 38-2
Section 38-3
Section 38-4.
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 what is being supplied satisfies the definition of food in section 38-4 of the GST Act and it 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 (paragraph 38-4(1)(a)) or ingredients for food for human consumption (paragraph 38-4(1)(b)). In your case, you sell both products to retail outlets as food for human consumption. Hence, the products can be treated as food for GST purposes.
Note that how a product meets the requirements of section 38-4 of the GST Act is not of importance when applying section 38-3 of the GST Act. Although a product may meet the requirements to be treated as food for GST purposes, the product will only be GST-free if the product is then not excluded from being GST-free by section 38-3 of the GST Act. Given this, it is necessary to determine if any of the products are excluded from being GST-free by section 38-3 of the GST Act.
Foods excluded from being GST-free
Both products do not fall within any of the exclusions in section 38-3 of the GST Act except possibly paragraph 38-3(1)(c). 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1 table) or is a food that is a combination of one or more foods at least one of which is food of such a kind.
The two products are not specifically included in the Schedule 1 table. Nevertheless, these products may be subject to GST by virtue of paragraph 38-3(1)(c) of the GST Act which refers to food of a kind to those foods listed in the Schedule 1 table.
The Schedule 1 table includes only the following food items (classified under the general heading of bakery items) that may be of relevance when considering the GST treatment of your two products:
· Pies (meat, vegetable or fruit), pasties and sausage rolls (Item 22 of Schedule 1)
· Pastizzi, calzoni and brioche (Item 25 of Schedule 1)
Your products cannot by themselves be considered as a prepared meal therefore, it is only necessary to consider if the products are a food of a kind similar to those foods listed in Items 22 and 25 of the Schedule 1 table.
Issue 30 of the Food Issues Register (Issue 30 which is available from the Australian Taxation Office website) provides our view on pastry products. Issue 30 illustrates that foods can be considered food of a kind if the food is a pastry product that is cooked by baking (a pasty is baked, pastizzi is baked etc). Issue 30 also provides that products such as dim sims and curry puffs are cooked by frying and hence would not be captured by Schedule 1. Issue 30 therefore concludes that a pasty product that is fried is substantially different to those products listed in Items 22 and 25.
Both your food products are similar to pasties or pastizzi; with both having similar savoury type fillings contained inside a pastry. Also, the instructions supplied with the products include both deep frying and baking as acceptable methods of cooking the products.
Given this, the two products can be treated as foods of a kind to those specified in the Schedule 1 table and as such are excluded from being GST-free by section 38-3 of the GST Act.
Note that clause 2 of Schedule 1 provides that the supply of bakery items (which include Items 22 and 25) are still taxable even though they may require cooking, heating, thawing or chilling prior to consumption.
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