Edited version of your private ruling

Authorisation Number: 1012580462337

Ruling

Subject: Meal kit

Question

Is the supply of the meal kit GST-free?

Answer

Yes

Relevant facts:

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

· You supply food products to retailers for resell.

· You request GST advice on the meal kit.

· The meal kit contains a pack of uncooked pasta and a small container of sauce.

· The packaging on the meal products promotes the product as a meal kit for uncooked pasta meals.

· You advised that the meal kit is not a prepared meal.

· The food products are not for consumption on the premises or hot takeaway foods,

· The meal kits must be kept refrigerated.

· The cooking instructions on the meal kit packaging advises the consumer to:

o Boil the pasta in a large container until cooked and then drain the water

o Remove the seal from the sauce container and pour the sauces into a sauce pan

o Heat the sauces until hot and then mix/add the cooked pasta onto the sauce.

Reasons for decision

Food is defined in section 38-4 of the GST Act. Under section 38-2 of the GST Act a supply of food is GST-free. However, food that is described in section 38-3 of the GST Act is not a GST-free.

The term food is defined in section 38-4 of the GST Act and includes food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). The meal kit is food for human consumption. Next we need to consider whether the meal kit is a type of food described in subsection 38-3(1) 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 foods specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or

· food that is a combination of one or more foods at least one of which is food of a kind listed in Schedule1.

The meal kit is kept refrigerated as it contains uncooked pasta. The meal kit is not food for consumption on the supplier's premises. The meal kit is not sold as hot food for consumption away from the supplier's premises.

Therefore we need to determine whether the meal kit is foods of a kind specified in Schedule 1. Food listed under an item in Schedule 1 is excluded from being GST free by section 38-3 of the GST Act (paragraph 38-3(1)(c) of the GST Act).

Items 1 to 7 in Schedule 1 relate to prepared food and are intended to cover food that directly compete against takeaways and restaurant food. We consider item 4 of Schedule 1 (Item 4) may be relevant to the meal kit. Item 4 is about food marketed as prepared meal, but not including soup.

When considering food under Item 4 we need to consider conditions outlined in clauses 2 and 3 of Schedule 1. Clause 2 of Schedule 1 provides when considering food under items 1 to 7 (prepared food) in Schedule 1, it does not matter whether the food is supplied hot, cold or frozen or requires cooking, heating, thawing or chilling prior to consumption. Clause 3 of Schedule 1 provides that Item 4 only applies to food that requires refrigeration or freezing for its storage.

The meal kit satisfies both Clause 2 and 3 of Schedule 1. The meal kit is kept refrigerated and the packaging advises the consumer to boil the pasta and then mix/add the sauce for consumption. Therefore, we need to consider whether the meal kit is a prepared meal under item 4.

Prepared Meals

The term 'prepared meal 'referred to in Item 4 is not defined in the GST Act and therefore takes its ordinary meaning.

'Meal' is defined in The Macquarie Concise Dictionary, 2001, revised 3^rd edition Macquarie Library Pty Ltd NSW (Macquarie Dictionary) as:

1. one of the regular repasts of the day, as breakfast, lunch, or dinner.

2. the food eaten or served for a repast.

This definition could be applied to a single food item or to a meal consisting of several food items.

The Macquarie Dictionary defines 'prepare' in relation to food as "to get ready for eating, as a meal, by due assembling, dressing or cooking".

The Further Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (the EM) 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'.

Included in this category (according to the EM at paragraph 1.33) are things such as:

· prepared meals such as curry and rice dishes, mornay's and similar dishes sold cold by a take-away or supermarket that only need reheating to be ready for consumption

· fresh or frozen lasagne

· sushi

· cooked pasta dishes sold complete with sauce

· frozen TV dinners and

· fresh or frozen complete meals (for example single serves of a roast dinned including vegetables and low fat dietary meals).

Paragraph 1.34 of the EM provides examples of food items that are not considered to be prepared meals:

· frozen vegetables

· uncooked pasta products

· fish fingers

· baby food, baked bens, spaghetti and Irish stew that do not require refrigeration or freezing.

In determining whether food is marketed as a 'prepared meal' the activities of the seller are relevant. Consideration is given to the following:

· the name of the goods

· the price of the goods

· the labelling on any containers for the goods

· literature or instructions packed with the goods

· how the goods are packaged

· how the goods are promoted or advertised and

· how the goods are distributed.

The Australian Taxation Office's (ATO) view on prepared meal is outlined in the ruling Goods and Services Tax Industry Issue - Food and Industry Partnership - Prepared Food (Prepared Food ruling). We enclose a copy for your reference

Paragraph 8 of the Prepared Food ruling states:

Therefore, for food to be regarded as a 'prepared meal' in accordance with Item 4, the food needs to be supplied assembled and dressed (if applicable)….

And paragraph 10 of the Prepared Food ruling states

Uncooked pasta products are not considered a prepared meal as they are not cooked.

The Prepared Food ruling provides some examples of prepared meals listed under item 4 and other examples of where the meals are not prepared meals listed under item 4. The food in example 2 is a prepared meal under item 4 and it consists of a frozen packet of fish and sauce combined with pasta. The foods are supplied assembled and dressed ready for consumption. The direction on the packaging requires the consumer to heat the foods before consumption.

However the foods in example 4 in the ruling consist of frozen vegetables and hokkien noodles (with or without sauces) and they are not prepared meals under item 4. The foods are not supplied assembled and dressed. The cooking instructions require the consumer to assemble the foods when preparing the meals.

You advised that the meal kit is not a prepared meal. It is sold as a meal kit containing uncooked pasta and a small container of sauce. The cooking instruction on the packaging advises the consumer to:

· Boil the pasta in a large container until cooked and then drain the water

· Remove the seal from the sauce container and pour sauces into a sauce pan

· Heat the sauces until hot and then mix/add the cooked pasta onto the sauce

Therefore the meal kit is not a prepared meal under item 4 as the consumer has to assemble the foods when preparing the meals. The meal kit is therefore not food of a kind listed in Schedule 1. The meal kit is not excluded from being GST free by section 38-3 of the GST Act.