Edited version of private ruling

Authorisation Number: 1011506614141

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Ruling

Subject: Goods and services tax (GST) and classification of food products

Questions:

1. Is the supply of cooked diced meat with sauce GST-free?

2. Is the supply of cooked diced meat with vegetables and sauce GST-free?

3. Is the supply of the following chilled products GST-free?

(a) Gravy

(b) Porridge, and

(c) Sauce.

4. Is the supply of diced marinated chicken meat in bulk GST-free?

5. Is the supply of cartons of twenty units of single serve marinated cooked ribs GST-free?

Answers:

1. Yes. The supply of cooked diced meat with sauce is GST-free.

2. No. The supply of cooked diced meat with vegetables and sauce is not GST-free. A supply of cooked diced meat with vegetables and sauce is a taxable supply.

3. (a) Yes. The supply of chilled gravy is GST-free.

(b) Yes. The supply of chilled porridge is GST-free

(c) Yes. The supply of chilled sauce is GST-free.

4. Yes. The supply of diced marinated chicken meat in bulk is GST-free.

5. Yes. The supply of cartons of twenty units of single serve marinated cooked ribs is GST- free.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

· You are a food processing company.

· You are registered for GST.

· You supply fresh meat, cooked meat and smallgoods, and you specialise in supplying cooked meats for different entities.

· Your range of products has expanded to include cooked cuts of most meats such as roasts, steaks, dice, ribs, fish and chicken in varying pack sizes.

· Recently you have introduced a range of cooked diced meats with sauces.

· These cooked diced meats with sauces are prepared by using fresh diced meat, adding ready made sauce, cooking in large water tanks, cooling, and selling the chilled or frozen product.

· You also add diced vegetables to some of these recipes.

· You will now supply the following food products: cooked diced meat with sauce GST-free, cooked diced meat with vegetables and sauce, diced marinated chicken meat in bulk and cartons of twenty units of single serve marinated cooked ribs.

· You will now also supply the following chilled food products:

(a) Gravy

(b) Porridge, and

(c) Sauce.

Questions 1, 3, 4 and 5:

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 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 paragraph 38-4(1)(a) of the GST Act as 'food for human consumption (whether or not requiring processing or treatment)'.

Under section 38-3 of the GST Act a supply of food is excluded from being GST-free if it falls into certain categories. These categories include:

a) if it is food for consumption on the premises from which it is supplied;

b) hot food for consumption away from the premises from which it is supplied;

c) food of a kind specified in the third column of the table in clause 1 of Schedule 1 of the GST Act (Schedule 1) or food that is a combination of one or more foods at least one of which is food of a kind listed in this table;

d) a beverage or ingredient for a beverage, other than a beverage or ingredient for a beverage, of a kind specified in the third column of the table in clause 1 of Schedule 2 of the GST Act; and

e) food of a kind specified in regulations made for the purpose of this section of the GST Act

You are supplying the following products as food for human consumption:

· cooked diced meat with sauce

· chilled gravy, chilled porridge and chilled sauce

· diced marinated chicken meat in bulk, and

· cartons of twenty units of single serve marinated cooked ribs.

As these products are supplied as food for human consumption, they fall within the definition of food for GST purposes.

Further, none of these products are excluded from being GST-free by section 38-3 of the GST Act, as they do not fall into any of the exclusions specified in this section.

Therefore your supplies of cooked diced meat with sauce, chilled gravy, chilled porridge and chilled sauce, diced marinated chicken meat in bulk, and cartons of twenty units of single serve marinated cooked ribs are all GST-free.

Question 2:

As discussed above, a supply of food 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. As stated above, food is defined in paragraph 38-4(1)(a) of the GST Act as 'food for human consumption (whether or not requiring processing or treatment)'.

Under section 38-3 of the GST Act a supply of food is excluded from being GST-free if it falls into the categories described above. These categories include food of a kind specified in the third column of the table in clause 1 of Schedule 1 of the GST Act, or food that is a combination of one or more foods at least one of which is food of a kind listed in this table.

You are supplying a product consisting of cooked diced meat with vegetables and sauce as food for human consumption. As such, they fall within the definition of food for GST purposes.

Item 4 in Schedule 1, which includes prepared meals, is of relevance to your supplies of cooked diced meat with vegetables and sauce.

The view of the Australian Taxation Office on food marketed as a prepared meal is explained in Issue 5 of the Food Industry Partnership - Issues Register (Issue 5). Issue 5 in the Food Industry Partnership - Issues Register can be found at our website http: www.ato.gov.au

Issue 5 provides the following explanation of 'food marketed as a prepared meal':

Issue 5

Prepared Food

What is a prepared meal?

Clause 1, Item 4 of Schedule 4 of the GST Act operates to subject the following to GST:

"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 ("the EM") provides that the term 'prepared meal' is intended to cover a range of food products that:

· directly compete against take-aways and restaurants;

· require refrigeration or freezing for storage (clause 3 of Schedule 1); and

· are marketed as a 'prepared meal'.

The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning.

The Macquarie Dictionary provides that 'meal' means "the food eaten or served for a repast". This definition could be applied to a single food item or to a meal consisting of several food items.

The Macquarie Dictionary defines 'prepare' in relation to food as "to get ready for eating, as a meal, by due assembling, dressing or cooking".

Paragraph 1.33 of the EM provides the following examples of prepared meals:

· prepared meals, such as curry and rice dishes, mornays and similar dishes sold cold by a take-away or supermarket that only need reheating to be ready for consumption;

· fresh or frozen lasagne;

· sushi;

· cooked pasta dishes sold complete with sauce;

· frozen TV dinners; and

· fresh or frozen complete meals (for example,. single serves of a roast dinner including vegetables and low fat dietary meals).

All of the above meals, except for the sushi, are of a kind that are duly assembled, cooked or partly cooked and require heating and completion of the cooking process for them to be ready for consumption. Sushi is by its nature ready for consumption when it is duly assembled even though part of it is raw.

Therefore, for food to be regarded as a "prepared meal" in accordance with Item 4, the food needs to be supplied assembled and dressed (if applicable). In addition, if the food is cooked or partly cooked and is to be served hot, it should only need heating, which may include completion of the cooking process, to be ready for consumption. Heating will be interpreted to mean warmed in the microwave oven, convection oven, frying pan, wok or saucepan.

Your cooked diced meat with vegetables and sauce is food of a kind specified in Item 4 of Schedule 1 as it is of a kind that is duly assembled, cooked or partly cooked and require heating and completion of the cooking process to be ready for consumption.

Therefore your supplies of cooked diced meat with vegetables and sauce are excluded from being GST-free under section 38-3 of the GST Act.

As a consequence, your supplies of cooked diced meat with vegetables and sauce is a taxable supply because you are registered for GST, and you will be supplying your product in Australia for consideration in the course or furtherance of your enterprise.

Further information:

Further information about GST and food is available on our website www.ato.gov.au , which has a GST food classification decision tool, and links to relevant issues registers and publications.