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Ruling
Subject: GST and food product
Question 1
Is the supply of your Product a GST-free supply of food for the purposes of section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
Yes
Relevant facts and circumstances
You are registered for goods and services tax (GST).
You have provided relevant details in respect of a new Product including the ingredients, method of production and specifications.
The Product does not contain a sweet filling or coating.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
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(d)
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)(c)
Reasons for decision
A supply of food is GST-free under section 38-2 of the GST Act if it satisfies the definition of food in section 38-4 of the GST Act and 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 Product is food for human consumption and, therefore, satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.
However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
The words 'food of a kind' in paragraph 38-3(1)(c) has the effect of expanding the class of goods to which the paragraph refers and would mean that the application of GST is not limited to the food products specifically listed in schedule 1, but cover food products which come within a class or genus of each item described in the schedule.
The Product is not specifically listed in Schedule 1. However, an Item that is of particular relevance to the supply of the Product is Item 27 in Schedule 1 (Item 27) which lists various bakery products such as 'bread (including buns) with a sweet filling or coating'. Therefore, if the Product is a food of a kind listed in Item 27, they will be subject to GST.
The GST Food Guide lists bread and rolls (no icing or filling) as GST-free.
Having characterised the Product as bread, it is necessary to determine whether the Product is a kind of 'bread with a sweet filling or coating' and hence not GST-free.
The Product contains another ingredient that is mixed with the dough before baking and is considered to be ingredients for the Product. They are not regarded as (sweet) fillings or coating. Accordingly, as the Product does not have a sweet filling or coating, they are not food of a kind specified in Item 27, and are not specified in any of the other items in Schedule 1.
The product does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of your Product is GST-free under section 38-2 of the GST Act.