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Edited version of your written advice
Authorisation Number: 1012694878616
Ruling
Subject: GST and Banana Bread
Question 1
Is the banana bread produced by you subject to goods and services tax (GST)?
Answer
Yes.
Relevant facts and circumstances
• You are registered for GST
• You manufacture banana bread for human consumption.
• Your banana bread comes in two sizes.
• The ingredients for your product include bananas, flour, sugar and eggs.
• No other ingredients are added such as nuts, raisins or coatings.
• The shelf and refrigerated life is the same as normal bread
• The product can be consumed on its own, made into sandwiches, plain toasted or butter, jam or other spreads added to it.
• You believe that item 27 in Schedule 1 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) does not apply as the addition of banana is not a sweet filling
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 Item 20
A New Tax System (Goods and Services Tax) Act 1999 Section 38-3
Reasons for decision
Summary
Banana bread is subject to GST as it is considered to be a kind of cake rather than bread.
Detailed reasoning
When you supply food for human consumption in Australia in the course of your business that food product is GST-free unless it is excluded from being so by the GST Act.
The GST Act excludes foods of a kind specified in Schedule 1 of the GST Act and of relevance to your banana bread is item 20. Item 20 in Schedule 1 (item 20) of the GST Act specifies that cakes and slices are not GST-free.
A product that does not possess all the same characteristics of a cake may still be within item 20 where it comes within the same genus, class or description of a cake.
In considering the class of product banana bread may be considered to be the ordinary definitions of cake and bread (as provided by the The Macquarie Dictionary, [Online], viewed 9 September 2014) provide us with the following definitions:
• Cake is a sweet baked food in loaf or layer form, made with or without shortening, usually with flour, sugar, eggs, flavouring, and a liquid.
• Bread is a food made of flour or meal, milk or water, etc., made into a dough or batter, with or without yeast or the like, and baked.
Taking into account these definitions which give us the normal meanings of the words bread and cake and the ingredients of your product it is considered that your banana bread is the same class as cake and as such would be subject to GST.
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