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Authorisation Number: 1051306829422

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Date of advice: 15 November 2017

Ruling

Subject: GST and food

Question

Is supply of the specified food GST-free?

Answer

Yes

Relevant facts and circumstances

● You are registered for the goods and services tax (GST).

● You carry on an enterprise of operating a takeaway salad store at a food court.

● The takeaway salad is supplied over the store counter and you do not provide table services.

● The takeaway salads may contain a mixture of green vegetables and meat with dressing.

● The fruit salad contains a mixture of fruit pieces in a takeaway container.

● In addition you also supply yoghurt in a takeaway container. The yoghurt is not a beverage and it is not supplied as frozen or soft served yoghurt

● There is no labelling or advertising on the takeaway container packaging to indicate any branding or marketing.

● You provide disposable takeaway utensils with the salads.

● The salads are ready for consumption and do not require further preparation. There is no hot food in the takeaway salads

● The salads require refrigeration for storage.

● The salads are not marketed as a prepared or complete meal

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-2

A New Tax System (Goods and Services Tax) Act 1999 subsection 38-3(1)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(c)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 Schedule 1

Reasons for decision

A supply of a product is GST-free under section 38-2 of the 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 for human consumption whether or not requiring processing or treatment (paragraph 38-4(1)(a) of the GST Act), and

● food ingredients for preparing foods for human consumption (paragraph 38-4(1)(b) of the GST Act).

The food products supplied from your salad store satisfy the definition of food as they are food for human consumption.

However, subsection 38-3(1) of the GST Act specifies some food products 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

Paragraph 38-3(1)(b) of the GST Act does not apply to the supplies of food products from your salad store as there is no hot food in the takeaway salads.

Paragraph 38-3(1)(d) of the GST Act does not apply to the supplies of food products from your salad store. The yoghurt is not a beverage or ingredient for a beverage.

Paragraph 38-3(1)(e) of the GST Act does not apply to the supplies of food products from your salad store as the foods are not food additives.

Next we have to consider whether the food products in your salad store are excluded from being GST-free by paragraphs 38-3(1)(a) and (c) of the GST Act.

Paragraphs 38-3(1)(c) of the GST Act - Food of a kind specified in Schedule 1

Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) or it is food consisting of a combination of one or more foods with at least one of which is food specified in Schedule 1.

Salads, fruit salads and yoghurt

Based on the information provided, the following items in Schedule 1 maybe applicable to the food products in your salad store:

Yoghurt

The yoghurt is not frozen and is not supplied as a soft serve ice-cream product. Therefore the yoghurt is not food of a kind listed under item 28 and 29 of Schedule 1. As the other items do not apply to the yoghurt, it is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.

Fruit salads

Item 5 of Schedule 1 applies to a platter or arrangements of food displayed on a shallow dish or plate ready for serving. A platter may contain cheese, cold cuts, fruits or vegetables on a shallow dish plate ready for serving. You may find a further explanation of a food platter in Goods and Services Tax Industry Issue - Food Industry Partnership - Prepared food (Prepared Food Ruling). We enclose a copy for your reference.

As the fruit salads are packed in a takeaway container, the fruit salads are not food products of a kind listed under item 5 of Schedule 1. In addition, as the fruit salad requires refrigeration for storage they are not food of a kind listed under item 29 of Schedule 1 (which is about frozen fruit products).

Therefore, the fruit salads are not food of a kind listed in Schedule 1 and are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.

Salads (a mixture of green vegetables, meat and dressing)

The takeaway salads could contain a mixture of green vegetables, meat and dressing in a takeaway container. The customers are provided with disposable takeaway utensils.

We consider that the only relevant item which may apply to the salads is item 4 of Schedule 1(Item 4). Item 4 is about food marketed as a prepared meal, not including soups.

A prepared meal under Item 4 must satisfy the conditions outlined in clauses 2 and 3 of Schedule 1 of the GST Act. Clause 2 of Schedule 1 provides that prepared food can be supplied hot, cold or frozen or require cooking, heating, thawing or chilling prior to consumption and clause 3 of Schedule 1 provides that prepared food requires refrigeration or freezing for its storage.

We consider that the salads satisfy both clauses 2 and 3 of Schedule 1 as the salads are supplied ready for consumption and they require refrigeration for storage. We need to consider whether the salad is a prepared meal.

The ATO view on prepared meal is outlined in the Prepared Food Ruling and paragraph 2 of the ruling 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 12 of the ruling provides that consideration is to be given to the supplier's activities when deciding whether a food is marketed as prepared meals. These include:

(a) the name of the goods;

(b) the price of the goods;

(c) the labelling on any containers for the goods;

(d) literature or instructions packed with the goods;

(e) how the goods are packaged;

(f) how the goods are promoted or advertised; and

(g) how the goods are distributed

A salad with meat does have the necessary balanced components to be considered as a prepared meal. However, the Prepared Food Ruling makes it clear that for GST purposes a product (unless specifically mentioned in the ruling) can only be considered a prepared meal if it is marketed as such. Marketing would include things such as advertising and packaging.

Further, the GST food guide provides that salads can include meat and seafood salads.

The salads are not specifically listed in the Prepared Food Ruling and you do not market the salads as prepared meals. The salads are supplied over the salad bar in containers and there is no literature, instructions or branding on the salad packaging. Given this, the supply of a salad with some meat would be GST-free.

Based on the above information, we consider that the salads are not marketed as a prepared meal. The salads are therefore not food of a kind listed under item 4 of Schedule and are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.

Paragraph 38-3(1)(a) of the GST Act- food consumed on the premises

The ATO view for food supplied for consumption on the premises is outlined in Goods and Services Determination GSTD 2000/5. Paragraph 4 of GSTD 2000/5 states:

If your business operations do not identify takeaway supplies from dine-in supplies, food will remain GST-free if:

● it is served in its original or takeaway form (for example, an unprocessed apple or unopened bottle of water); and

● it is not served in circumstances indicating that consumption will take place on the premises (for example, the food is not served at a table).

The salads are sold over the store's counter and you do not provide any table services or differentiate in any way the salads that may be consumed in the food court. The foods are sold in takeaway disposable containers with a lid and disposable takeaway utensils and you cannot determine whether a customer will consume the food in or away from the premises, for example the food court.

Consequently, in accordance with paragraph 4 of GSTD 2000/5, paragraph 38-3(1)(a) of the GST Act does not apply to the food products.

Therefore, the food products are not excluded by subsection 38-3(1) of the GST Act, the food products are GST-free under section 38-2 of the GST Act.

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