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Ruling

Subject: Food classification

Question

Is the supply of the dessert GST free?

Decisions

No

Relevant facts:

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

You retail the desserts for human consumptions.

The desserts contain sponge cake as a base with a sweet filling on top.

Reasons for decision

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 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 (whether or not requiring processing or treatment)(paragraph 38-4(1)(a) of the GST Act). As the dessert are food for human consumption, they satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.

Subsection 38-3(1) of the GST Act provides that a supply of food is not GST-free if it is a supply of, amongst other things:

· food for consumption on the premises from which it is supplied, or

· hot food for consumption away from those premises, or

· food of a kind specified in Schedule 1 of the GST Act, or

· food that is a combination of one or more foods at least one of which is food of such a kind

The desserts are not sold as hot food and are not for consumption on the suppliers' premises. Next we have to consider whether the desserts are food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).

In your case we consider item 20 in Schedule 1 (Item 20) maybe applicable to your desserts. Item 20 is about cakes, slices, cheesecakes, pancakes, waffles, crepes, muffins and pudding.

Desserts

The desserts have the sponge cake as a base and a filling on top. We do not consider the desserts to be dairy desserts for GST purposes (which is GST free). The base layer is made up of a sponge cake which is prepared as cake separate from the fillings and the base is not prepared using cold-set method, as the method is normally used to prepare dairy desserts.

Therefore, we consider that the dessert to be food of a kind similar to foods described in item 20. As they are foods of a kind listed in Schedule 1 and they are therefore excluded from being GST free under section 38-3 of the GST Act (paragraph 38-3(1)(c ) of the GST Act.

For your information the GST status of food is outlined in the ATO public ruling "Detailed Food List" (Food lists). We enclose a copy for your reference. The relevant items relating to your desserts listed on the Food Lists is as follows: