Edited version of private ruling

Authorisation Number: 1011664062529

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Ruling

Subject: GST classification of food products

Question

Are your supplies of a roast meat and gravy product GST-free supplies?

Answer: Yes, your supplies of this food product are GST-free.

Relevant facts and circumstances

You manufacture the roast meat and gravy product. It is supplied in a microwavable pack.

Your agent has submitted photographs and the nutritional information of the product along with the application.

The packaging of the roast meat and gravy product includes a suggested recipe the consumer can use with the product. This recipe requires additional ingredients to be added by the consumer.

This product is food for human consumption manufactured on your premises. It will be sold to chain stores for sale to consumers but will not be consumed on the retailers' premises.

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 Section 38-4 and

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

Reasons for Decision

Question

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 section 38-4 of the GST Act to include, amongst other things:

· food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act), and

· goods to be mixed with or added to food for human consumption (including condiments, spices, seasonings, sweetening agents or flavourings).

The roast meat and gravy product considered in this ruling is food for human consumption and therefore, satisfies the definition of food in the GST Act.

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 clause 1 of Schedule 1 to the GST Act (Schedule 1).

The roast meat and gravy product that is considered in this ruling is not specifically listed in Schedule 1. As such, the issue is whether each of the roast meat and gravy products is a 'food of a kind' (belonging to the same class or genus) specified in Schedule 1.

As item 4 of Schedule 1, which lists 'food marketed as a prepared meal, but not including soup', is of most relevance in this case, we will examine the roast meat and gravy product against this item.

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, 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 defines 'meal' as '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'.

The Food Industry Partnership - issues register (Issue 5) (which is available on our website at www.ato.gov.au) further explains that in determining whether food is marketed as a 'prepared meal' the activities of the seller are relevant. Consideration is given to the following:

· the name of the goods

· the price of the goods

· the labelling on any containers for the goods

· literature or instructions packed with the goods

· how the goods are packaged

· how the goods are promoted or advertised

· how the goods are distributed.

The EM at paragraph 1.33 provides 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

· 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).

The contents of the roast meat and gravy product are heated in separate sachets. The instructions on the packaging state that the roast meat and gravy both have to be heated separately before the gravy can be poured onto the meat prior to serving, indicating that the product is not duly assembled.

Further, a prepared meal is something that is capable of being a meal in itself. The roast meat and gravy product is not a complete meal as it would be expected to be served with additional food such as vegetables, rice or chips. Therefore the product you are selling is distinguishable from frozen TV dinners (which are considered to be prepared meals).

The labelling on the outer packaging of the roast meat and gravy product includes recipes suggesting it be served as part of a meal with vegetables. Accordingly it is not considered to be marketed as a prepared meal.

In summary, your supply of the roast meat and the gravy product is not a prepared meal because it is:

· not duly assembled

· not in the form of a complete meal, and

· not marketed as a prepared meal.

As the roast meat and gravy product is not foods marketed as prepared meals, it is not of a kind specified at item 4 of Schedule 1. Therefore your supply of this product will be a GST-free supply under section 38-2 of the GST Act.