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Ruling

Subject: GST and the supply of food

Question

Is your supply of a particular product consisting of food items (Food Product) subject to goods and services tax (GST)?

Answer

No. Your supply of the Food Product is a GST-free supply of food.

Relevant facts and circumstances

You are registered for GST.

You contract with other organisations within Australia to provide taxable services.

You supply as an additional service to an organisation a Food Product.

The Food Product can include any number of food items, all of which are uncooked.

There are accompaniments that come with the Food Product, for example salt and pepper.

The Food Product is delivered on trays.

The Food Product is cooked by the organisation and not you.

The Food Product is typically consumed at the organisation's premises.

Your charge one fee for the Food Product on your invoice. All labour and other related costs you incur in preparing and delivering the Food Product are incorporated into the contract you have with the organisation.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 (GST Act):

section 38-2

section 38-3, and

section 38-4.

Reasons for decision

You provide taxable services and as part of your enterprise you also supply a product known as a Food Product. This involves amongst other things the preparation and delivery to an organisation's premises of uncooked food and accompaniments.

Your charge one fee for the Food Product, with your labour and other related costs of preparing and delivering the Food Product being incorporated into the overall contract you have with the organisation. Consequently, your supply of the Food Product is a supply of food (herein simply referred to as the food) which can be GST-free in certain circumstances. Following from this, it is necessary to determine if your supply of the food can be treated as being GST-free.

GST-free supply of food

The only provision in the GST Act that allows your supply of the food to be GST-free is section 38-2 of the GST Act. However, the food must not come within any of the exclusions listed in section 38-3 of the GST Act.

Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of the foods defined in this provision, the most relevant to your circumstances is paragraph 38-4(1)(a) which provides for food for human consumption (whether or not requiring processing or treatment).

In your case, the food is fit for human consumption and therefore food for the purposes of section 38-2 of the GST Act.

Excluded food items

The supply of food excluded from being GST-free under section 38-3 of the GST Act that is of relevance to your supply of the food includes:

· food for consumption on the premises from which it is supplied

· hot food for consumption away from those premises, and

· platters (a type of food specified in section 38-3 of the GST Act with reference to the table in clause 1 of Schedule 1 to the GST Act).

Food for consumption on the premises from which it is supplied

The ATO view on the definition of the word premises used in section 38-3 of the GST Act is provided by the public determination GSTD 2000/4 (also available from the ATO website). This determination discusses the word premises in context of a catered event and a delivery service of food items. The determination makes it clear that where we have a catered event, the food has been prepared by the caterer, ready for consumption on the premises from which it is supplied. On the other hand, food that is delivered uncooked and unprepared and which can be consumed at any location is not a catered event but just a delivery service of food items. The following example from paragraph 6 of GSTD 2000/4 illustrates this point:

In some situations it is important to consider from which premises the supply of food is made. Where food is provided under catering arrangements the food may be prepared in a commercial kitchen and transported to a location where it is to be consumed. In these circumstances food is supplied from the premises where the catered event takes place. In contrast food that is home delivered (for example, milk, water, pre-ordered takeaway food and supermarket items) is not a supply of food for consumption on the premises from which it is supplied. In these circumstances the delivery service is a separate supply from the supply of food which may be consumed at any location.

In your case, the food is provided on trays along with the accompaniments. It is then necessary for the client to prepare the food (including cooking) to place it in a state that allows it to be consumed.

The food is typically prepared and consumed at organisation's premises, however, it is not a requirement for the food to be prepared and consumed at this location. Hence, in line with the above example, your supply of the food is more akin to a delivery of food and not a catered event given that the supply of the food is not for consumption on the premises from which it is supplied.

Consequently, your supply of the food would not be excluded from being GST-free under this dot point.

Hot food for consumption away from those premises

As the food is supplied cold and unprepared to be consumed, it cannot be considered as hot food that has been supplied for consumption away from the premises (such as a takeaway meal) from which it is supplied. Consequently, the food would not be excluded under this dot point.

Platters

The ATO food guide (also available from the ATO website) defines a platter as a large shallow dish, commonly oval, for serving food items. It further provides that a platter or arrangement of food can be uncovered and placed on a table ready for serving (for example, a catered product at a barbeque).

The key feature of a platter therefore, is that the food on the dish is reading for serving, that is, it is in a state ready to be consumed. An example of a platter meeting this requirement would be a tray of cooked processed cold meats and cheese.

In your case, although the food is delivered on trays, the food cannot be considered as a platter for GST purposes as it is not ready for consumption. Hence, the food would not be excluded under this dot point.

Food accompaniments

The accompaniments also contain food items that would generally be GST-free as per the discussion given above.

Again, in line with the example from paragraph 6 of GSTD 2000/4, the supply of these food items would also be a GST-free supply of food.

Consequently, given that the food is food for the purposes of GST and is not excluded from being food under section 38-3 of the GST Act, its supply would be GST-free. Consequently, you are making a GST free supply when you supply your Food Product.