ATO Interpretative Decision
ATO ID 2001/268
Goods and Services Tax
GST and Savoury Flavoured FocacciasFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells savoury flavoured focaccias?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells savoury flavoured focaccias.
Facts
The entity is a food supplier. The entity supplies savoury flavoured focaccias. Some examples include pumpkin flavoured focaccias, olive topped focaccias, herb topped focaccias and tomato flavoured focaccias. The olive topped and herb topped focaccias do not have a substantial amount of topping and are not akin to pizza.
The savoury flavoured focaccias supplied by the entity do not have a sweet filling or coating.
The savoury flavoured focaccias are not sold for consumption on the premises from which they are supplied. The entity does not supply the savoury flavoured focaccias as hot food for consumption away from those premises.
The entity is registered for goods and services tax (GST).
Reasons for Decision
A supply of food is GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.
Food is defined in paragraph 38-4(1)(a) of the GST Act to include food for human consumption (whether or not requiring processing or treatment). Savoury flavoured focaccias are food for human consumption.
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). The category of food from Schedule 1 that is of particular relevance to this case is 'bakery products'.
Item 27 from the category 'bakery products' in Schedule 1, provides that bread (including buns) with a sweet filling or coating is not GST-free. The issue therefore, is whether the flavoured focaccias are considered to be bread (including buns) with a sweet filling or coating.
In this case, all of the focaccias supplied by the entity are savoury flavoured, or have savoury toppings. The focaccias supplied by the entity do not have sweet fillings or coatings.
Therefore, the savoury flavoured focaccias are not covered by item 27 of Schedule 1 as they are not considered to be bread (including buns) with a sweet filling or coating.
In addition, the supply of savoury flavoured focaccias does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act, when it sells the savoury flavoured foccacias.
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 38-2
section 38-3
paragraph 38-3(1)(c)
paragraph 38-4(1)(a)
Schedule 1 clause 1
Schedule 1 clause 1 table item 3
Schedule 1 clause 1 table item 27
Keywords
Goods & services tax
GST free
GST food
Food for human consumption
ISSN: 1445-2782