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Edited version of private advice
Authorisation Number: 1012639156419
Ruling
Subject: Food ingredients
Question
Is the supply of the food ingredients GST-free?
Advice
Yes
Relevant facts:
• You are registered for goods and services tax (GST).
• You are a food manufacturer and you supply food ingredients to your customers for further processing into food for human consumption.
• The food ingredients supplied are food fillings and uncooked pastry.
• The food fillings consist of cooked meat.
• The uncooked pastry has been pre-cut for convenience. The pastries are stored frozen.
Reasons for decision
A supply of a product is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (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 section 38-4 of the GST Act to include food ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act).
The food fillings and pastries are ingredients for foods for human consumption. They are supplied as food ingredients for making food for human consumption. Therefore they satisfy the definition of food in paragraph 38-4(1)(b) of the GST Act
However, subsection 38-3(1) of the GST Act specifies some foods that are excluded from being GST-free. The subsection states:
A supply is not GST-free under section 38-2 if it is a supply of:
(a) *food for consumption on the *premises from which it is supplied; or
(b) hot food for consumption away from those premises; or
(c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or
(d) a *beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2; or
(e) food of a kind specified in regulations made for the purposes of this subsection.
* denotes a defined term in the GST Act
You supply pastries and food fillings as food ingredients. We need consider whether paragraph 38-3(1)(c) of the GST Act applies to the food ingredients.
Foods that are of a kind specified in the third column of the table in clause 1 of Schedule 1 (Schedule 1) or food that is a combination of one or more foods with at least one of which is food of such a kind specified in Schedule 1 are excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act
Food fillings
The food fillings consist of cooked meat. The cooked meats are food ingredients which require further processing into food for human consumption. They are not intended to be sold to the consumer for consumption.
As the cooked meats are not food of a kind listed in Schedule 1, they are therefore not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
Pastry
The pastry is raw uncooked pastry which has been pre-cut for convenience. The uncooked pastry is stored frozen. The uncooked pastry is not food of a kind listed in Schedule 1 and is therefore not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
Therefore, the food fillings and uncooked pastry are not excluded from being GST-free by section 38-3 of the GST Act. The food fillings and uncooked pastry are food ingredients (under paragraph 38-4(1)(b) of the GST Act) and are therefore GST-free under section 38-2 of the GST Act.
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