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Edited version of your written advice

Authorisation Number: 1051310113748

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Date of advice: 27 November 2017

Ruling

Subject: GST and food

Question

Is the sale by the takeaway of coleslaw and potato salad a GST-free supply?

Answer

Yes, the sale of coleslaw and potato salad is a GST-free supply when they are sold for takeaway.

Facts

You are a takeaway business which is registered for goods and services tax (GST).

There are tables and chairs at the premises but they are for the customers to wait until their order is ready. No one consumes any food at the premises, and no food is served on plates at the tables.

You sell potato salad and coleslaw. Customers choose the type of salad and the size they want, and the staff packs it up for them. The salads are always in plastic boxes and cutlery is provided to the customers when they purchase the salads.

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 section 38-3.

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 section 38-4.

A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 4.

Reasons for decision

A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if it satisfies the definition of food in section 38-4 of the GST Act and is not excluded from being GST-free under section 38-3 of the GST Act.

The meaning of food in section 38-4 of the GST Act includes food for human consumption (whether or not requiring processing or treatment). The salads are for human consumption. Therefore, the prepared salads fall within the meaning of food in section 38-4 of the GST Act as food for human consumption.

However, subsection 38-3(1) of the GST Act explains which food is not GST-free:

You advised that this is a takeaway shop and no food is consumed on the premises. Further, the food is neither hot food nor specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations). Therefore, paragraphs 38-3(1)(a), (b), (d) and (e) of the GST Act do not apply.

However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Of specific relevance is item 4 of Schedule, which provides that food marketed as a prepared meal (but not including soup) is not GST-free.

The GST food guide and GST food index available on the Tax Office website at www.ato.gov.au states that salad (green, rice, pasta, coleslaw) not marketed as a prepared meal is GST-free.

Issue 5 in the ‘Food Industry Partnership - Issues Register’ deals with the term ‘prepared meal’:

Therefore, for food to be regarded as a ‘prepared meal’ under item 4 of Schedule 1, the food needs to be assembled, dressed, cooked or partly cooked. Although the salads require refrigeration and are duly assembled, dressed and ready for consumption they are not similar to the examples listed above. Therefore, the supply of the coleslaw and potato salad is GST-free.


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