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Ruling
Subject: Biscuits
Question
Is the supply of biscuits GST free?
Answer:
No
Relevant facts:
You are registered for goods and services tax (GST).
You carry on an enterprise of importing biscuits for sale.
The ingredients in the biscuits are cereals, sugar and salt.
The label indicates that the biscuits are oven-baked.
The biscuit is not made of compressed cereals.
The label indicates that the biscuit is for infants.
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)(c)
A New Tax System (Goods and Services Tax) Act 1999 section 38-4
A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(a)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 item 32
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). Your products are foods for human consumption as they satisfy the definition of food in section 38-4 of the GST Act. The products are marketed as biscuits for infants.
However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is excluded from being GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Food of such a kind specified in Schedule 1
The GST status of biscuits is outlined in the Australian Taxation Office (ATO) public ruling "Detailed Food List" (Food List). We enclose a copy of the ruling for your reference. Biscuits are listed as taxable (not GST-free) in the Food List as it is food of a kind specified under item 32 in Schedule 1.
However clause 5 of Schedule 1 provides that breakfast food consisting of compressed, rolled or flattened cereals and rusk for infants or invalids are not included in the category of biscuit goods under item 32.
In your case, the product is marketed as a biscuit for infants. However, we consider clause 5 of Schedule 1 does not apply to your products. The product is not made up of compressed, rolled or flattened cereals and it does not resemble rusk for infants or invalids. It resembles products described as biscuits in both shape and appearance.
The biscuits is food of a kind listed under item 32 in Schedule 1 and is therefore excluded from being GST free by paragraph 38-3(1)(c) of the GST Act.