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Edited version of your written advice
Authorisation Number: 1012827363479
Date of advice: 23 June 2015
Ruling
Subject: Goods and services tax (GST) and food
Question
Is GST payable on your sales of the product you market under the brand name (brand name)?
Answer
Yes.
Relevant facts and circumstances
You are registered for GST.
You sell a product called (brand name).
(Characteristics of product)
You sell a number of varieties of the product.
(Information on preparation process)
(Marketing information)
(Information on website
(Information on the packet)
(Information on product placement)
You supply the products wholly within Australia.
You do not supply the products for consumption from the premises from which you supply them.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
A New Tax System (Goods and Services Tax) Act 1999 section 38-2
A New Tax System (Goods and Services Tax) Act 1999 section 38-3
A New Tax System (Goods and Services Tax) Act 1999 section 38-4
Reasons for decision
Summary
Your products are not GST-free under the food exemption because:
• your products are a combination of foods, at least one of which is food of a kind specified in item (X) in the table in clause 1 of Schedule 1 to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), and
• your products are food of a kind listed in item (Y) of that table.
Detailed reasoning
GST is payable on your taxable supplies.
You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:
You make a taxable supply if:
(a) you make the supply for *consideration; and
(b) the supply is made in the course or furtherance of an *enterprise that
you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST-free
or *input taxed.
(*Denotes a term defined in the GST Act)
You meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:
• you supply the products for consideration
• you supply the products in the course or furtherance of an enterprise that you carry on
• these supplies are connected with Australia, and
• you are registered for GST.
There are no provisions of the GST Act under which your sales of the products are input taxed.
Therefore, what remains to be determined is whether your sales of the products are GST-free.
A supply of food is GST-free in accordance with section 38-2 of the GST Act, if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in subsection 38-3(1) of the GST Act.
Subsection 38-3(1) of the GST Act 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
(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 12, 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.
Foods that are a combination of one or more foods at least one of which is foods of a kind listed in Schedule 1.
Subsection 15AB(1) of the Acts Interpretation Act 1901 (Acts Interpretation Act) provides that consideration may be given to material not forming part of an Act for particular purposes including: 'to determine the meaning of the provision when the provision is ambiguous or obscure'.
Paragraph 15AB(2)(e) of the Acts Interpretation Act provides that any explanatory memorandum relating to the Bill containing the provision is extrinsic material that may be considered for this purpose.
Therefore it is appropriate to consider the Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (EM). The EM states:
1.17 Food that is a combination of one or more foods, at least one of which is food of a kind specified in the table in new Schedule 1A of the Bill (prepared food, confectionery, savoury snacks, bakery products, ice-cream food and biscuit goods is not GST-free. For example, a snack pack containing cheese and biscuits is not GST-free because it contains at least one type of food specified in new Schedule 1A (biscuits).
Paragraph 1.18 of the EM clarifies the intended scope of this provision by stating that it does not apply to a mix of packaged goods, packed and sold together, such as a hamper.
Because of the differing treatment of the snack pack and hamper examples in paragraphs 1.17 and 1.18 of the EM, it is considered that the snack pack in the example differs from 'a mix of packaged goods packed and sold together' because the individual components are supplied in a single tray, not separately packaged.
Your products are food for human consumption. Therefore, they are food for the purposes of the GST Act.
(Information from Detailed Food List on ATO website)
Our conclusion
Your products are food as defined in the GST Act. However, the exclusion at paragraph 38-3(1)(c) of the GST Act applies because:
• they are a combination of foods at least one of which is food covered by item (X), and
• the products are covered by item Y.
Therefore, your sales of the products are not GST-free under section 38-2 of the GST Act. There are no other provisions of the GST Act under which your sales of the products are GST-free.
Hence, as all of the requirements of section 9-5 of the GST Act are met, GST is payable on your sales of the products.
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