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Ruling

Subject: GST and food

Question

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

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You sell a particular food product (Product).

The Product is sold uncooked and frozen to third parties, who then on-sell to their customers.

The Product is sold in plastic bags of varying weights.

The Product is normally cooked by boiling or steaming.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):

Section 38-2

Section 38-3

Section 38-4

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.

The definition of food in section 38-4 of the GST Act includes food for human consumption, whether or not requiring processing or treatment. Your Product is sold as food for human consumption and consequently can be treated as food for human consumption.

Your Product does not fall within any of the exclusions in section 38-3 of the GST Act except possibly paragraph 38-3(1)(c). 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) or is a food that is a combination of one or more foods at least one of which is food of such a kind.

Schedule 1 includes the following food items that may be of relevance when considering the GST treatment of your supply of the Product:

o food marketed as a prepared meal (Item 4 of Schedule 1), and

o bakery products, in particular pastry products (Items 22 to 25 of Schedule 1).

Prepared meals

The ATO view on prepared meals is provided by Issue 5 of the Food Issues Register (Issue 5 - available from the ATO website www.ato.gov.au).

Issue 5 considers that food to be regarded as a prepared meal needs to be supplied assembled and dressed (if applicable). In addition, if the food is cooked or partly cooked and is to be served hot, it should only need heating, which may include completion of the cooking process, to be ready for consumption.

Issue 5 provides some examples of prepared meals. However, in relation to your Product, Issue 5 states unequivocally that a food item similar to your Product cannot be considered as a prepared meal if the food item is not cooked.

Given this, as your Product is sold uncooked it does not fall within Item 4 of Schedule 1.

Bakery products

Pastry products, such as pies, pasties, sausage rolls, pastries and pastizzi are specifically included in Schedule 1. Clause 2 of Schedule 1 operates to ensure that these items are subject to GST regardless of whether they are supplied hot or cold, or require cooking, heating, thawing or chilling prior to consumption.

There are a number of products that incorporate pastry as their outer layer and are not specifically included in Schedule 1. These products may be subject to GST by virtue of paragraph 38-3(1)(c) of the GST Act which refers to food of a kind specified in the third column of the table in clause 1 of Schedule 1.

Hence, in considering if the Product is a food of a kind, it is relevant to look at the food products listed in Items 22 to 25 of Schedule 1.

The ATO view on bakery products is provided by Issue 30 of the Food Issues Register (Issue 30 - also available from the ATO website). Issue 30 provides that in order for products to be of a kind to the food products listed in Items 22 to 25 of Schedule 1, the products would need to be baked before consumption. Consequently, those products that are fried, steamed or boiled cannot be considered to be of the same kind.

Given that the Product is generally cooked by boiling or steaming, the product cannot be considered as falling within Items 22 to 25 of Schedule 1.

Given these circumstances, your supply of the Product is not exempted from being a food for human consumption under section 38-3 of the GST Act and hence, it is a food as defined by subsection 38-4(1) of the GST Act. Consequently, your supply of the Product is not subject to GST.