Edited version of your written advice

Authorisation Number: 1012769335500

Ruling

Subject: GST and pureed food

Question

What is the goods and services tax (GST) status of your pureed food?

Answer

Pureed food (like any other type of food) must satisfy the relevant legislative provisions from the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) before its supply can be treated as being GST-free. The type of purchaser (be it the general public or a business), how the food is consumed or whether the food must be eaten under the direction of healthcare professionals plays no part in determining the GST status of the food under these provisions.

Please refer to Reasons for Decision for the GST status of the individual food items.

Supplies of your pureed meat, vegetable and fruit products satisfy the legislative provisions of the GST Act to allow their supplies to be GST-free as food for human consumption.

However the supplies of your dessert and biscuit range of products do not satisfy the legislative provisions of the GST Act to allow their supplies to be GST-free as food for human consumption and they are therefore taxable.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

• You are a company registered for GST.

• You produce a complete range of portion controlled, individual serves of pureed food items.

• Your products consist mainly of pureed meat, pureed vegetable, pureed fruit and pureed dessert items.

• The pureed products are individually weighed for portion control and hand crafted into a mould resembling the finished product, such as a BBQ chop and then snap frozen.

• The complete range of dessert products consist of a similar range of base ingredients and processes with minor variations for additional ingredients required, depending on the final product being made.

• All cake and biscuit type products start off from a "cake" base cooked on the premises with major ingredients being flour, eggs, sugar and butter. Minor ingredients, depending on the final product include such items as essence, cocoa and gelatine.

• Once the cake has been baked on a tray it is then cooled, broken up and put through a special machine to mince it up very fine with ingredients such as water, milk and cream added. This forms a smooth liquid consistency which is poured into molds that are the shape of the finished product. These molds are then blast frozen for a period of time. The frozen products are then de-molded and packaged into trays.

• Meat, vegetable and dessert items are all sold as individual items/serves, primarily in packs of 10.

• The products are not sold or marketed as prepared meals.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999:

Section 38-2

Section 38-3

Section 38-4.

Schedule 1

Reasons for decision

Summary

The pureeing of food does not necessarily imply that the food will be GST-free if, in its original state, it is taxable. The pureed food must still satisfy the relevant legislative requirements from the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) that would allow the supply of a food to be GST-free.

Detailed reasoning

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.

The definition of food in section 38-4 of the GST Act includes food for human consumption, whether or not requiring processing or treatment.

Pureed meat, vegetable and fruit food products

Your supply of the pureed meat, vegetable and fruit food products does not fall within any of the exclusions in section 38-3 of the GST Act and therefore are GST-free as food under section 38-2 of the GST Act.

Pureed dessert and biscuit food products

Your supply of the pureed dessert and biscuit food products do not fall within any of the exclusions in section 38-3 of the GST Act except possibly paragraph 38-3(1)(c). 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1) or is a food that is a combination of one or more foods at least one of which is food of such a kind. [Emphasis added]

Schedule 1 includes the following food items that may be of relevance when considering the GST treatment of your supply of the pureed dessert and biscuit food products:

• cakes, slices and cheesecakes, pancakes, waffles, crepes, muffins and puddings (Item 20 of Schedule 1)

• ice-cream, ice-cream cakes, ice-creams and ice-cream substitutes

…any food similar to food listed in items 28 to 30 (item28 of Schedule 1)

• food that is, or consists mainly of, biscuits, cookies, wafers, crackers, pretzels, cones or wafers (Item 32 of Schedule 1).

Item 20 of Schedule 1 (Item 20)

The terms cakes and slices are not defined in the GST Act and are therefore afforded their ordinary meaning as provided by the Macquarie Dictionary (On-line edition).

Cakes and slices

'Cake' is defined by the Macquarie Dictionary (On-line edition) to mean amongst other things 'a sweet baked food in loaf or layer form, made with or without shortening, usually with flour, sugar, eggs, flavouring and a liquid'. The definition of slice is 'any of several cakes or biscuits cooked or formed as a thin slab and cut into rectangular pieces'.

You have advised that your products start off from a "cake" base cooked on the premises with major ingredients being flour, eggs, sugar and butter. Minor ingredients, depending on the final product include such items as essence, cocoa and gelatine.

Once the cake has been baked on a tray it is then cooled, broken up and put through a special machine to mince it up very fine with ingredients such as water, milk and cream added. This forms a smooth liquid consistency which is poured into molds that are the shape of the finished product. These molds are then blast frozen for a period of time. The frozen products are then de-molded and packaged into trays of between 4 and 9 items, depending on the item.

Give the facts supplied and the definitions; it is considered that your cake products are not GST-free under the GST Act or any other Act. The supply of the products is a taxable supply and is subject to GST as they meet all the requirements of section 9-5 of the GST Act.

Tiramisu

The 'relevant legislative test' for the Tiramisu product, is whether the products is:

• 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.

The term 'of a kind' is not defined in the GST Act. The phrase was considered in Lansell House where the court confirmed that there was no 'bright line' test for what is or is not a food in Schedule 1. The phrase 'of a kind' was given its ordinary meaning and on the facts in Lansell House, the question was 'whether the product at issue came within the genus, class or description of a cracker'?

Whilst a product can be characterised in more than one way, this is irrelevant for the purposes of the GST Act, as a product can only be classified as one particular item. In Customs and Excise Commissioners v. Ferrero UK Ltd Lord Wolf MR concluded that where a product has the characteristics of two categories, it is placed in a category in which it has sufficient characteristics to qualify.

Where the Tiramisu is a food of a kind in Schedule 1, it will not be GST-free. Of particular relevance to Tiramisu is Item 20.

While the Tiramisu may be considered to be a 'pudding' under a broader view, based on the facts provided, it is nonetheless considered that it is a: cake; cheesecake; or a kind of a cake or cheesecake; so that it is included within the exception of being GST-free provided by section 38-3 and Item 20 of Schedule 1.

The supply of the product is a taxable supply and is subject to GST as it meets all the requirements of section 9-5 of the GST Act.

Puddings

The term 'pudding' is not defined in the GST Act and are therefore afforded its ordinary meaning as provided by the Macquarie Dictionary (On-line edition).

'Pudding' is defined by the Macquarie Dictionary (On-line edition) to mean amongst other things "a sweet or savoury dish made in many forms and of various ingredients, as flour (or rice, tapioca, or the like), milk, and eggs, with fruit, meat, or other ingredients; often cooked wrapped in cloth or in a round tin and boiled, steamed, or baked".

Give this definition, it is considered that your pureed Bread and butter pudding is not GST-free under the GST Act or any other Act. The supply of the product is a taxable supply and is subject to GST as it meets all the requirements of section 9-5 of the GST Act.

Item 28 of Schedule 1 (Item 28)

Ice-cream Food

Item 28 specifically lists ice-cream, ice-cream cakes, ice-creams and ice-cream substitutes. Accordingly your supply of the ice-cream product is not GST-free under the GST Act or any other Act and will be a taxable supply and subject to GST.

Item 32 of Schedule 1 (Item 32)

Biscuit goods

Biscuits are specified in item 32 of Schedule 1 (Item 32). Item 32 specifies food 'that is, or consists principally of, biscuits, cookies, crackers, pretzels, cones or wafers' and are not GST-free.

Furthermore, biscuits and biscuit crumbs are also listed as taxable in the GST Food Guide.

As biscuits are specifically mentioned in Schedule 1, they fall within one of the foods specified in the third column of the table in Schedule 1. Consequently, the supply of your biscuit products are not GST-free under the GST Act or any other Act. The supply of the products is a taxable supply and is subject to GST as it meets all the requirements of section 9-5 of the GST Act.

Further comment

Note that the purchaser of the food (be it the general public or a business entity) or whether the food must be eaten under the direction of healthcare professionals plays no part in determining the GST status of the food under the above legislative provisions.