Edited version of your written advice

Authorisation Number: 1012735530788

Ruling

Subject: GST and Cookie Dough

Question 1

Is the supply of Cookie Dough GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Relevant facts and circumstances

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

• You supply a Cookie Dough.

• The product is mixed dough contained in a plastic container.

• The product requires refrigeration for storage and is supplied with the ingredients forming part of the dough

• The dough requires no further mixing or treatment other than slicing and baking by the consumer to make the cookies.

• The products are sold in the refrigerated section.

• The product is promoted or advertised as "Ready to bake cookie dough".

• The labelling on the packaging shows the finished product as baked cookies or biscuits on a plate.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Section 38-2

Section 38-3

Section 38-4

Clause 1 of Schedule 1

Clause 2 of Schedule 1

Reasons for decision

Summary

Your supply of the Cookie Dough is not GST-free under section 38-2 as it is excluded from being GST-free under paragraph 38-3(1)(c) of the GST Act.

Detailed reasoning

All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) unless otherwise.

GST is payable by you on your taxable supplies.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *registered, or *required to be registered.

However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

In your case, you will satisfy the requirements of paragraphs 9-5(a) to 9-5(d). That is, you will supply the Cookie Dough for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, these supplies will be connected with Australia and you are registered for GST.

There are no provisions in the GST Act under which your sales of the Cookie Dough product will be an input taxed supply.

Therefore, what remains to be determined is whether your sales of the Cookie Dough product will be a GST-free supply.

A supply of food is GST-free under section 38-2 if the product satisfies the definition of food in section 38-4 and the supply is not excluded from being GST-free by section 38-3.

Food is defined in section 38-4 and Cookie Dough would be considered food for human consumption under paragraph 38-4(1)(a).

From the information provided, the Cookie Dough is a food product ready to bake into cookies. The Cookie Dough cannot be considered to be ingredients for food for human consumption under paragraph 38-4(1)(b). This is because ingredients generally are used in a mixture to make food.

Under paragraph 38-3(1)(c) 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 (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind specified in Schedule 1.

Item 32 in the table in Schedule 1 (Item 32) is relevant to this case. It excludes 'food that is, or consists principally of, biscuits, cookies, crackers, pretzels, cones or wafers' from being GST-free.

Ordinary Meaning of "Biscuit", "Cookie" and "Dough"

The relevant definition for biscuit in the Australian Oxford Dictionary (2 ed.) (Online, Oxford University Press, 2004) (Dictionary) is as follows:

1. a small unleavened cake, usu. flat and crisp and often sweet.

The relevant definition for cookie in the Dictionary is as follows:

1. a small sweet biscuit.

The relevant definition for dough in the Dictionary is as follows:

1. a thick mixture of flour etc. and liquid (usu. water), for baking into bread, pastry,
etc.

From the facts provided and applying the ordinary meanings of the terms "cookie" and "dough", the Cookie Dough is a dough product which will become cookies once cooked, in this case baked. Relevantly, item 32 is expanded by clause 2 of Schedule 1 (Clause 2), which states:

For the purpose of determining whether particular *food is covered by any of the items in the table relating to the category of prepared food, bakery products or biscuit goods, it does not matter whether it is supplied hot or cold, or requires cooking, heating, thawing or chilling prior to consumption.

Accordingly, as per the application of Clause 2 the Cookie Dough is covered under the term "cookies" in item 32.

It is also considered that the need to slice the product into individual cookies before baking for consumption does not preclude Clause 2 from applying as taxable food.

Furthermore, cookie dough is specifically listed in the "Detailed Food List" (DFL) which is published on the ATO website and which forms a public ruling for the purpose of the Taxation Administration Act 1953. The relevant item on the DFL states, "cookie dough (supplied hot or cold or requires cooking, heating, thawing or chilling prior to eating)" as taxable and that, "Schedule 1, item 32 and clause 2 of the GST Act apply".

A public ruling such as the DFL is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

This means that the Cookie Dough is excluded from being GST-free by paragraph 38-3(1)(c).

Therefore, the supply of the Cookie Dough is taxable where all the provisions of section 9-5 of the GST Act are satisfied.