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Ruling

Subject: Cooked chicken

Question

Is the supply of cooked chicken GST-free?

Answer:

Yes

Relevant facts and circumstances

You are registered for goods and services tax (GST).

You carry on an enterprise of wholesaling cooked chickens.

The chickens are cooked and then stored in a fridge with temperature below 0 degrees.

You wholesale the cooked chicken to food retailers for resale.

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 paragraph 38-3(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(b)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(c)

Reasons for decision

 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.

Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a) of the GST Act). In this case your supply satisfies the definition of food in section 38-4 of the GST Act as the cooked chicken is food for human consumption.

Subsection 38-3(1) of the GST Act operates to specifically exclude certain foods from being GST-free. The relevant paragraphs that may be applicable are:

· paragraph 38-3(1)(a) of the GST Act - supply for consumption on the supplier's premises or

· paragraph 38-3(1)(b) of the GST Act - hot food supplied for consumption away from the suppliers' premises ie: hot take-away food

· paragraph 38-3(1)(c) of the GST Act - food of a kind specified in the third column of the table clause 1 of Schedule 1 to the GST Act.

Consumption on the supplier's premises

You advised that you wholesale the cooked chickens to food retailers for resale. Therefore paragraph 38-3(1)(a) of the GST Act does not apply as the cooked chicken are not supplied for consumption on your premises.

Hot food for consumption away from the suppliers' premises

The Australian Tax Office has provided guidance on food classification in the Food Industry Issue Register (Food Register) at the websites: www.ato.gov.au. Issue 28 of the Food Register provides an explanation on the application of GST on hot food for consumption away from the suppliers' premises.

The word "hot" is not defined for the purposes of the GST Act, however paragraph 1.28 of the Further Supplementary Explanatory Memorandum to A New Tax System (Goods and Services Tax) Bill 1999 provides some guidance. It states:

"Hot food means food that has been heated above the room temperature or above the generally surrounding air temperature for consumption. You do not need to check the precise temperature because food or drink which has been heated so that it can be consumed while still hot will be at a higher temperature than the surrounding air temperature."

A supply of cold cooked chicken for consumption away from the suppliers' premises, will not satisfy paragraph 38-3(1)(b) of the GST Act. You store the cooked chickens at temperature below 0 degree and wholesale them to the food retailers as cold chicken for resale, therefore paragraph 38-3(1)(b) of the GST Act is not satisfied.

Food of a kind specified in the third column of the table clause 1 of Schedule 1

Schedule 1 of the GST Act has no application to the classification of chicken, as the supply is not considered to be the supply of a 'prepared meal' under item 4 to clause 1 of Schedule 1 of the GST Act. Although the cooked chicken is kept at temperature below 0 degree for sale, it is not marketed as a prepared meal.

Therefore, as the supply of the cold cooked chicken is not excluded from being GST-free under section 38-3 of the GST Act, it is GST-free under section 38-2 of the GST Act.

For your information

The ATO has a published a ruling on food classification's "Detailed Food List" Goods and Services Tax Industry Issue which outlined the GST status of the supply of cooked chicken. We enclose a copy for your reference.