| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012466651181
Ruling
Subject: Foods
Question
Are the supplies of the salads GST-free?
Advice
Yes
Relevant facts:
· You are registered for the goods and services tax (GST).
· You have been requested by a retailer to supply salads in bulk for retail sales.
· The salads do not include fruit salads.
· The salads contain ingredients such as vegetables, noodles, nuts, seeds and meat.
· The packaging only contains a description of the salads content
· The salads require refrigeration for storage.
· The salads are not for consumption on the premises from which they are supplied.
· The salads are supplied in bulk to the retailer. The salads are not supplied as individually packed prepared or complete meals.
· The retailer would display the salads in their display counters and serve to their customers in small containers.
Reasons for decision
A supply of a product 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
The salads satisfy the definition of food as they are foods for human consumption (whether or not requiring processing or treatment).
However, subsection 38-3(1) of the GST Act specifies some foods that are excluded from being GST-free. The subsection states:
A supply is not GST-free under section 38-2 if it is a supply of:
(a) *food for consumption on the *premises from which it is supplied; or
(b) hot food for consumption away from those premises; or
(c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or
(d) a *beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2; or
(e) food of a kind specified in regulations made for the purposes of this subsection.
* denotes a defined term in the GST Act
Paragraph 38-3(1)(a) of the GST Act does not apply to the wholesale supply of salads as they are not for consumption on your premises.
Paragraph 38-3(1)(b) of the GST Act does not apply as there are no hot foods in the salads. The salads require refrigeration for storage.
Paragraph 38-3(1)(d) of the GST Act does not apply as the salads are not beverages or ingredient for a beverage.
Paragraph 38-3(1)(e) of the GST Act does not apply to the salads as they are not food additives. The salads contain ingredients such as vegetables, meat, nuts and seeds and are for consumption as a meal or a side dish.
Paragraphs 38-3(1)(c) of the GST Act - Food of a kind specified in Schedule 1
Next we have to consider whether the salads are specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) or it is food consisting of a combination of one or more foods with at least one of which is food specified in Schedule 1. Where the foods are specified in Schedule 1, they will be excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
Based on the information provided, the following items in Schedule 1 maybe relevant to salads:
Items |
Foods |
Item 5 |
platters etc, of cheese, cold cuts, fruits or vegetables and other arrangements of food |
Item 4 |
food marketed as a prepared meal but not including soup |
Item 16 |
Seeds or nuts have been processed or treated by salting, spicing, smoking or roasting or in any other similar way |
Item 18 |
Food similar to that covered by item 15 or 16 whether or not it consists wholly or partly of any vegetable, herb, fruit, meat, seafood or diary product or extract and whether or not it is artificially flavoured |
Item 19 |
Food consisting principally of food covered by item 15 or 18 |
Item 5 of Schedule 1(Item 5)
Item 5 applies to a platter or arrangements of food displayed on a shallow dish or plate ready for serving. A platter may contain foods such as cheese, cold cuts, fruits or vegetables.
In your case the salads are supplied in bulk and not on platters. Therefore, the salads are not food products of a kind listed under item 5.
Food marketed as a prepared meal - Item 4 of Schedule 1(Item 4)
Item 4 is about food marketed as a prepared meal, not including soups.
A prepared meal under Item 4 must satisfy the conditions outlined in clauses 2 and 3 of Schedule 1 of the GST Act. Clause 2 of Schedule 1 provides prepared food can be supplied hot, cold or frozen or require cooking, heating, thawing or chilling prior to consumption and clause 3 of Schedule 1 provides that prepared food requires refrigeration or freezing for its storage.
We consider that the salads satisfy both clauses 2 and 3 of Schedule 1 as the salads are ready for consumption when supplied and they require refrigeration for storage.
The ATO view on prepared meal is outlined in the Prepared Food Ruling and paragraph 2 of the ruling provides that the term "prepared meal" is intended to cover a range of food products that:
· directly compete against takeaways and restaurants
· require refrigeration or freezing for storage, and
· are marketed as a prepared meal.
Paragraph 12 of the ruling provides that consideration must be given to the suppliers' activities when deciding on whether a food is marketed as a prepared meal. The considerations are:
(a) the name of the goods;
(b) the price of the goods;
(c) the labelling on any containers for the goods;
(d) literature or instructions packed with the goods;
(e) how the goods are packaged;
(f) how the goods are promoted or advertised; and
(g) how the goods are distributed
In your case the salads are not packed in individual small containers ready to serve. The salads are supplied in bulk to the retailer for retail sales. Further the salad's pricing will be wholesale prices and the packaging only contains a description of the salad's content. Therefore the wholesaling of the salads to the retailer does not directly compete against retail sales by takeaways or restaurants. The salads are supplied in bulk are therefore not food of a kind listed under item 4.
Items 16, 18 and 19 of Schedule 1 (items 16, 18 and19)
We consider that items 16, 18 and 19 do not apply to the salads. Although the salads contain seeds and nuts, they are not food similar to items 15 and 16 of Schedule 1, which are savoury snacks foods. The salads contain ingredients such as nuts and seeds are for consumption as part of a meal or a side dish.
As the salads are not foods that are specified in Schedule 1, they are therefore not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act
Therefore, the salad foods are not excluded by subsection 38-3(1) of the GST Act, and you can treat the supply of these salads as GST-free food under section 38-2 of the GST Act.