Edited version of your private ruling

Authorisation Number: 1012487613618

Ruling

Subject: Salads

Question

Is the supply of the salads food GST-free?

Advice

Relevant facts:

· You are the trustee of a trust and are registered for the goods and services tax (GST).

· You carry on an enterprise of operating a salad store.

· The salad store is located at a food court.

· The salads are supplied as takeaway salads over the store's counter.

· You do not provide table services.

· You request advice on the GST status of the

· chicken pasta salad - contains chicken, pasta and vegetables salads with sauce

· salads - contains vegetables salads with sauce

· chicken salad - contain chicken and vegetables salads with sauce

· The pasta and chicken in the salad foods are cooked foods.

· You promote your salad foods as healthy food

· You advised that the salads are sold as takeaway foods and are not for consumption on the premises from which they are supplied. Customers are provided with disposable takeaway utensils.

· The salads are packed in containers without labels on the packaging and are supplied not for consumption on the premises.

· You further advised the salads are not marketed as a prepared or complete meal.

· The salads are ready for consumption and do not require further preparations.

· There is no hot food in the takeaway salads.

· The salad foods require refrigeration for storage.

Reasons for decisions

A supply of a product 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 salads satisfy the definition of food as they are food for human consumption.

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

We consider paragraphs 38-3(1)(a) and (c) of the GST Act may be relevant to the salads.

Paragraphs 38-3(1)(c) of the GST Act - Food of a kind specified in Schedule 1

Paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is 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.

Based on the information provided, the following items in Schedule 1 maybe applicable to your salads:

Salads

The salads with ingredients such as chicken, vegetables, pasta with sauce are packed in clear plastic containers with lids and customers are provided with disposable takeaway utensils. The salads are not food products of a kind listed under item 5 of Schedule 1 as the salads are not arranged on a platter ready for serving.

Next we need to consider whether the salads are marketed as prepared foods and therefore fall under 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 Australian Taxation Office (ATO) view on prepared meal is outlined in Goods and Service Tax Industry Issue - Food partnership Prepared Food (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

A salad containing meat does have the necessary balanced components to be considered as a prepared meal. However, the Prepared Food Ruling makes it clear that for GST purposes a product (unless specifically mentioned in the ruling) can only be considered a prepared meal if it is marketed as such. Marketing would include things such as pricing, advertising, promotions, packaging, etc. Further, the GST food guide provides that salads can include meat and seafood salads.

Chicken pasta salad

The chicken pasta salad is a complete meal that could directly compete against takeaway or restaurant foods. The salad foods contain chicken, salads and pasta packed in a container, ready for consumption. They could be foods similar to takeaway or restaurant foods.

The ATO view on "prepared meal" is outlined in Goods and Service Tax Industry Issue - Detailed Food List (Detailed Food List) ruling as follows

The Detailed Food List ruling provides examples for prepared meals. The examples include curry with rice or seafood in sauce with pasta and/or vegetables packed in a container from which the food can be eaten. These are examples of prepared meals that directly compete with takeaway and restaurant foods.

In addition the Prepared Food ruling provides another example of a prepared meal. The example in the Prepared Food ruling provides a packet containing fish and sauce, combined with pasta is a prepared meal. Paragraphs 15 and 16 of the Prepared Food ruling state:

15. Also in the frozen food section of the supermarket is a packet of fish and sauce, combined with pasta. The directions on the packet are to either microwave on high for four minutes, stir and then microwave for a further two minutes or to bake in the oven for 20 minutes, after which time the product is ready to eat.

16. In this instance, the fish and sauce, combined with pasta is considered to be a 'prepared meal'.

Based on the above, we consider that the chicken pasta salad is a prepared meal for GST purposes and it is food of a kind listed under item 4. The salads contain chicken, pasta and salads. Therefore these foods are excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.

Vegetable salad and chicken salad

The vegetable salad and chicken salad contain the vegetables, salad and meat only, which in our view would not amount to foods that compete directly with takeaways or restaurant foods. Although the salads are sold similarly in manner as the above prepared meals (chicken pasta salad), the food is not similar to the prepared meal listed in the rulings such as curry with rice or seafood in sauce with pasta and/or vegetables packed in a container.

Whilst they are similarly packed as the chicken pasta salad, you advised that the vegetable salad and chicken salad are not marketed as a prepared meal and they do not directly compete against takeaways and restaurants. The salads unlike the chicken pasta salad do not contain pasta or rice as an additional ingredient. Therefore, these foods are not food of a kind listed under item 4 and are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act

Paragraph 38-3(1)(a) of the GST Act- food consumed on the premises

The vegetable salad and chicken salad are not foods of a kind listed under item 4 and are therefore not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. Next, we have to determine whether these salads are foods supplied for consumption on the supplier's premises (paragraph 38-3(1)(a) of the GST Act).

The ATO view on a supply of food for consumption on the premises is outlined in Goods and Services Determination GSTD 2000/5. Paragraph 4 of GSTD 2000/5 states:

If your business operations do not identify takeaway supplies from dine-in supplies, food will remain GST-free if:

· it is served in its original or takeaway form (for example, an unprocessed apple or unopened bottle of water); and

· it is not served in circumstances indicating that consumption will take place on the premises (for example, the food is not served at a table).

The salads are sold over the store's counter and you do not provide any table services or differentiate in any way the salads that may be consumed in the food court. The salads are sold in takeaway disposable containers with a lid and disposable takeaway utensils and you cannot determine whether a customer will consume the food in or away from the premises, for example the food court.

Consequently, in accordance with paragraph 4 of GSTD 2000/5, paragraph 38-3(1)(a) of the GST Act does not apply to the salads.

Therefore, the vegetable salad and chicken salad are not excluded from being GST-free by subsection 38-3(1) of the GST Act. These salads are GST-free under section 38-2 of the GST Act.