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Ruling
Subject: GST and food product
Question 1
Is your supply of the product a GST-free supply of food under 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 a company registered for the goods and services tax (GST) effective from 1 July 2000.
You are to launch a new product.
The product requires freezing for its storage recommended at minus 18 degrees Celsius and is to be reheated in a microwave prior to consumption.
The instructions for cooking printed on the packaging of the product describe heating in a microwave oven only.
The product is described on the packaging as a soup.
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
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). The product is food for human consumption.
However, section 38-3 of the GST Act specifies food that is not GST-free. 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 specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 4 of Schedule 1 (Item 4) lists food marketed as a prepared meal but not including soup.
Clause 3 of Schedule 1 of the GST Act provides that Item 4 in the table only applies to food that requires refrigeration or freezing for its storage.
In your case, the product is supplied frozen and there are instructions for heating using a microwave oven provided on the packaging. However, wording on the packaging describes the product as a soup.
Although the product is frozen, it is marketed as a soup, therefore it complies with Item 4 as soup and it is specifically excluded from Item 4. Thus, the product is not food of a kind specified at Item 4. It is not relevant that the soup is frozen as the GST Act does not exclude frozen soups from being GST-free.
The supply of the product does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the supply of the product is a GST-free supply of food under section 38-2 of the GST Act.