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Ruling
Subject: GST and the sale of a particular food item
Questions
Are your sales of a particular food item (Food Item) that is consumed on your premises subject to goods and services tax (GST)?
Are your sales of the Food Item that is consumed away from your premises subject to GST?
Is it correct to treat your sales of the Food Item as taxable if you are not satisfied that consumption will take place away from your premises?
Answers
Yes.
No.
Yes.
Relevant facts and circumstances
You are registered for GST.
You provide services to your customers on your premises.
You sell the Food Item on your premises.
Your premises do not have designated dining areas.
There are no restrictions on where the Food Item may be consumed on your premises.
The Food Item may be consumed away from your premises.
Users of your premises can bring their own Food Item.
You do not have any method to determine if the consumption of the Food Item will occur in or away from your premises and therefore have been treating the sales of the Food Item as taxable.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999
Section 38-2
Section 38-3
Section 38-4
Section 38-5.
Reasons for decision
Are your sales of the Food Item that is consumed on your premises subject to GST?
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 given in section 38-4 of the GST Act and is not excluded from being GST-free by section 38-3 of the GST Act.
Your Food Item meets the definition of a food under section 38-4 of the GST Act.
However, under paragraph 38-3(1)(a) of the GST Act, a supply of a food is not GST-free if it is consumed on the premises from which it is supplied.
The purpose of paragraph 38-3(1)(a) of the GST Act is to ensure that all food supplied for consumption on the supplier's premises will be subject to GST. This is the case irrespective of whether the sale of the food item would otherwise be GST-free.
Premises
The term premises are defined in section 38-5 of the GST Act and includes in the definition:
· the place where the supply takes place
· the grounds surrounding a cafe or public house, or other outlet for the supply, or
· the whole of any enclosed space such as a football ground, garden, showground, amusement park or similar area where there is a clear boundary or limit.
Please note however that premises does not include any part of a public thoroughfare unless it is an area designated for use in connection with supplies of food from an outlet for the supply of food.
The ATO view on the meaning of premises for the purposes of section 38-5 of the GST Act is given by the Goods and Services Tax Determination GSTD 2000/4 (available from the website www.ato.gov.au ). Paragraph 1 of GSTD 2000/4 provides a list of premises that fall within the section 38-5 definition and includes any venues associated with leisure, sport or entertainment that have clear boundaries or limits.
Further, paragraph 3 of GSTD 2000/4 lists the type of venues that are normally associated with leisure, sport or entertainment. Gyms, swimming pools and other similar sporting venues are included in this list.
In your case, with reference to paragraphs 1 and 3 of GST 2000/4, your premise have clear boundaries and therefore are premises for the purposes of your sale of the Food Item.
Please note all that is required under 38-5 of the GST Act is that the premises have a clear boundary or limit.
Your premises cannot be considered as public thoroughfares. Consequently, your premises can be considered as premises where food is consumed for the purposes of 38-5 of the GST Act. Consequently, when you sell the Food Item that is consumed on your premises, it will be subject to GST.
Are your sales of the Food Item that is consumed away from your premises subject to GST?
You are entitled to sell the Food Item GST-free provided you are satisfied that consumption will take place away from your premises.
Is it correct to treat your sales of the Food Item as taxable if you are not satisfied that consumption will take place away from your premises?
Presently, you do not have any method to determine if the consumption of the Food Item will occur in or away from your premises and therefore have been treating the sales of the Food Item as taxable.
Given you cannot be satisfied where consumption of the Food Item will actually take place, you are treating the sales of the Food Item correctly when making all your sales taxable.