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Edited version of private ruling
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Ruling
Subject: GST and pastries
Question 1
Are you making a GST-free supply when you supply a fried savoury-filled pastry product?
Answer
Yes, you are making a GST-free supply when you supply a fried savoury-filled pastry product.
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 registered for GST.
You are in the business of the production of pastries.
You make fried savoury-filled pastries (pastry).
The pastry is semi-cooked, frozen and ready to cook in minutes.
The cooking instructions on the packet state that you fry the pastry on a hot plate or fry pan.
You supply the pastry to retailers.
You do not sell the pastry for consumption on the premises or as hot food for consumption away from the premises.
Detailed reasoning
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 it is not excluded by 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)'. The pastry is food for human consumption.
Subsection 38-3(1) of the GST Act provides that a supply of food is not GST-free under section 38-2 of the GST Act 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.
The pastry that you supply is not food for consumption on the premises and it is not hot food for consumption away from those premises. It is not a beverage and is not food of a kind specified in regulations. The pastry is not specifically listed in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). As such, the issue in this case is whether the pastry is 'food of a kind' specified in Schedule 1.
The phrase 'food of a kind' is not defined in the GST Act. However, the words 'of a kind' and their meanings were considered in Hygienic Lily Ltd v. Deputy Commissioner of Taxation (NSW) (1987) 13 FCR 399. Accordingly, it is considered that food will be 'food of a kind' listed in Schedule 1 if it is food belonging to the same class or genus as food listed in Schedule 1. The items from Schedule 1 that are of most relevance to this case are items 22, 23 and 25 of Schedule 1.
Item 22 of Schedule 1 lists 'pies (meat, vegetable or fruit), pasties and sausage rolls'. All of these products are baked. Therefore, in order for the pastry to belong to the same class of food as 'pies (meat, vegetable or fruit), pasties and sausage rolls', it needs to be baked. As the pastry is fried, it is not considered to be 'food of a kind' known as 'pies (meat, vegetable or fruit), pasties and sausage rolls'.
Item 23 of Schedule 1 lists 'tarts and pastries'. After consultation with The Food Consultative Committee it is considered that the reference to 'tarts and pastries' in item 23 of Schedule 1 is to sweet and not savoury pastries. Moreover, item 23 of Schedule 1 is not intended to be a catch all provision for all products that are made from pastry. As such, the pastry is not 'food of a kind' known as pastries.
Item 25 of Schedule 1 lists 'pastizzi, calzoni and brioche'. All of these products are baked. Therefore, in order for the pastry to belong to the same class as 'pastizzi, calzoni and brioche' it needs to be baked. As the pastry is fried, it is not considered to be 'food of a kind' known as 'pastizzi, calzoni and brioche'.
The pastry therefore falls outside the scope of Schedule 1.
The supply of the pastry by you does not fall within any of the exclusions in section 38-3 of the GST Act. Therefore, you are making a GST-free supply of food under section 38-2 of the GST Act when you supply the pastry.