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Ruling
Subject: Food classification
Question:
Is the supply of custard GST free?
Advice:
Yes
Relevant facts:
· You are registered for goods and services tax (GST).
· You carry on an enterprise of selling food.
· You are currently promoting your custard product.
· The custard is flavoured.
· The custard does not require cooking.
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 (whether or not requiring processing or treatment)(paragraph 38-4(1)(a) of the GST Act). The Australian Taxation Office (ATO) has published a ruling "Goods and Service Tax Industry Issue - Food industry Partnership -What is food?" which outlines the meaning of food for GST purposes. Paragraph 1 of the ruling provides that a product is food if it is for human consumption (whether or not requiring further processing or treatment). In addition paragraph 6 of the ruling states:
There is no requirement for the supplier to ascertain how the purchaser will use the product. The GST status of the product depends on whether it is a supply of food for human consumption as defined in the Act.
Therefore, the custard satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act as it is promoted and supplied as food for human consumption. As indicated in paragraph 6 of the ruling it does not matter how the purchaser will use the product.
However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not 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).
The GST status of food is outlined in the Goods and Services Tax Industry Issues -Detailed Food List (Food list). We enclose a copy for your reference. The relevant items in the Food Lists are:
Item |
GST status |
Notes |
custard (flavoured, fruit, powder, ready-to-eat) |
GST-free |
Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. |
custard tart (supplied hot or cold or requires cooking, heating, thawing or chilling prior to consumption) |
taxable |
Schedule 1, item 23 and clause 2 of the GST Act apply |
egg custard |
GST free |
Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. |
fruit custard |
GST free |
Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. |
Flavoured custard (ready-to-eat) is GST-free as it is food for human consumption that is not of a kind specified in Schedule 1 of the GST Act
The custard is food for human consumption that is not of a kind specified in Schedule 1 of the GST Act and it is therefore not excluded from being GST-free by section 38-3 of the GST Act.