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Edited version of your written advice
Authorisation Number: 1012841917380
Date of advice: 16 July 2015
Ruling
Subject: Goods and services tax (GST) and food
Question
Is GST payable on your supply of the cooked food products (without accompaniment) for sale in supermarkets?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
As part of the expansion of your range of retail products, you intend to introduce two new product categories for sale.
The cooked food product is modified atmosphere packaged in polypropylene trays sealed with plastic film and boxed, to be sold in supermarkets (the same way in which raw meat and poultry products are often sold in supermarkets.
The cooked food only product (number of grams) is intended to form part of a meal prepared at home.
Rice, vegetables, breads and condiments are required to be prepared and added to or served with the cooked food product to form a complete meal.
The cooked food product is not marketed with suggested serving ideas or recommendations.
The intended varieties of cooked food are traditional X dishes.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
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
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1
Reasons for decision
Summary
Your sales of the proposed cooked food products will be GST-free sales of food.
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 A New Tax System (Goods and Services Tax) Act 1999 (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)
Section 38-2 of the GST Act states:
A supply of *food is GST-free.
'Food' is defined in section 38-4 of the GST Act to include 'food for human consumption (whether or not requiring processing or treatment)'. In your case, the products are food for human consumption and therefore, satisfy the definition of food in section 38-4 of the GST Act.
However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free under section 38-2 of the GST Act if it is a supply of food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind;
Item 4 in the table in clause 1 of Schedule 1 (item 4) states:
*food marketed as a prepared meal, but not including soup
The Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (EM) provides that the term 'prepared meal' is intended to cover a range of food products that:
• directly compete against takeaways and restaurants
• require refrigeration or freezing for storage and
• are marketed as a prepared meal.
Paragraph 1.33 of the EM provides examples of prepared meals which include:
Prepared meals, such as food and rice dishes, mornays and similar dishes sold cold by a take-away or supermarket that only need reheating to be ready for consumption.
If the food product directly competes with takeaways and restaurants, it is considered to be a prepared meal.
In deciding whether a food product directly competes with takeaways and restaurants, it is necessary to consider whether that product is usually supplied by takeaways or restaurants with accompaniments. These products are usually served with rice or another accompaniment.
A prepared meal is something that is capable of being a meal in itself. Your cooked food products would usually be eaten with the addition of rice, vegetables, breads and condiments to complete the meal. These accompaniments need to be added by the consumer or served with the cooked food product in order to form a complete meal.
Therefore your currently proposed cooked food products will not compete with take-aways and are not prepared meals. Hence, these products are not marketed as prepared meals. Therefore, the exclusion at item 4 does not apply.
The proposed cooked food products are not excluded by any other items in Schedule 1 nor do they contain any foods that are covered by any items in Schedule 1. Accordingly, the supplies of the products are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
Furthermore, the supply of the products does not fall within any of the other exclusions in section 38-3 of the GST Act. Accordingly, the supply of these products is GST-free.
Therefore, GST is not payable on the proposed cooked food products.
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