Edited version of your written advice

Authorisation Number: 1012877051253

NOTICE

This private ruling was revised following issue. This edited version has therefore been replaced with the edited version of the private ruling with the authorisation number of 1051192109726

Date of advice: 14 September 2015

Ruling

Subject: GST and frozen toddler food

Question 1

Is the supply of the range of products GST-free under section 38-2 of the A New Tax System (Goods and Service Act) Act 1999 (GST Act)?

Answer

Yes, apart from one product.

Question 2

Relevant facts and circumstances

You are launching a new range of products, fresh chilled baby and toddler meals. They will be sold in Xg serves in pots. The range will cover smooth purees, early proteins, textured meals and meals for X months plus.

The product is developed especially for babies and toddlers and although sold fresh from the refrigerator, it is the same in construct and purpose as other like baby and toddler meals currently on the market.

Serving Instructions:

Serve hot or cold direct from the pot. If heating, heat thoroughly and allow to cool a little, before serving.

Storage Instructions:

Store below 4 degrees. This is a fresh product and is best consumed within 2 days of opening.

The first X dishes are (as evident by name) purees or similar that are marketed to the younger end of the segment.

The next is a fine dish, suitable for the younger part of the segment.

A X dish is a coarse puree with rice already added.

A Y dish is pasta with a fine sauce mixed through it and it is similar to other pasta products that attract GST.

A Z dish is a textured meal similar to a rough puree, some ingredients are discernible but are not in a fully solid state

A XY dish is a mixture of white sauce, XY and vegies. It does not have a vegetable topping as other XY pies do.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-2

A New Tax System (Goods and Services Tax) Act 1999 section 38-3

A New Tax System (Goods and Services Tax) Act 1999 section 38-4

Reasons for decision

Summary

The supply of the range of products apart from the pasta dish is GST-free under section 38-2 of the GST Act.

Detailed reasoning

Section 9-5 of the GST Act 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 the indirect tax zone; 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 situation, you will be providing the baby food and the toddler food for consideration and in the course of your enterprise. The baby food and the toddler food are supplied in Australia and you are registered for GST. Therefore, the supply of baby food and toddler food meets the requirements of subsections (a)-(d) of 9-5 of the GST Act.

It is necessary to determine if your supply of baby food and toddler food is GST-free. There are no provisions under the GST Act that would treat the supply of baby food and toddler food as input taxed.

A supply of food is GST-free under section 38-2 of the GST Act. However certain types of prepared food are not GST-free. Item 4 of Schedule 1 to the GST Act (Schedule 1) provides that food marketed as a prepared meal, but not including soup is not a GST-free supply of food. Clause 3 to Schedule 1 provides that item 4 only applies to food that requires refrigeration or freezing for its storage. You have advised that the range of products require refrigeration or freezing for storage.

The GST Food Guide published on the Tax Office website (the food guide) lists baby food as GST-free but only to the extent that it is in tins or jars and does not require refrigeration or freezing. If a baby food is correctly classified as a prepared meal that requires refrigeration or freezing for its storage, it will not be GST-free by action of Item 4 of Schedule 1.

The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning. The Macquarie Dictionary, 3^rd edition (dictionary), provides that 'meal' means '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 dictionary defines 'prepare' in relation to food as 'to get ready for eating, as a meal, by due assembling, dressing or cooking'.

The food guide notes that a prepared meal is a food that meets the following three conditions:

● it directly competes with takeaways and restaurants

● it needs refrigeration or freezing for storage

● it is marketed as a prepared meal but is not soup.

The food guide provides guidance as to what is regarded as prepared meals, and states that a prepared meal is food marketed as a prepared meal, but not including soup. Your product is prepared in that it is assembled, ie no further activity apart from heating is required.

In determining whether food is marketed as a 'prepared meal', the food guide says consideration should be given to how the goods are promoted or advertised, and the name, price, labelling, instructions, packaging and placement of the goods in the store.

Some of the characteristics of the product are consistent with those of prepared meals e.g. instructions (serve hot [or cold] direct from the pot), the packaging, the size of the product and the labelling of some of the range.

However, these factors do not conclusively indicate that the product is marketed as a prepared meal. The food guide gives further assistance by providing examples of prepared meals including:

● curry and rice dishes, mornays and similar dishes sold cold 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 dinner including vegetable and low fat dietary meals).

On balance, we do not consider that baby and toddler food, which consists of purees, early proteins and textured meals are similar to the types of taxable prepared meals listed in the food guide. Further we do not consider that this type of food directly competes with takeaways and restaurants. It follows that the products that make up this component of the range are not prepared meals and are therefore be GST-free.

The products that make up the component of the range that are meals for X months plus could conceivably compete with meals from restaurants and takeaways. Most in the range are however, are differentiated sufficiently enough to avoid the prepared meal exclusion with the exception of the pasta dish.

The X dish is a coarse puree with rice already added rather than in the format served in restaurants and takeaways. Similarly the Z is a textured meal similar to a rough puree with some ingredients discernible but not in a fully solid state, unlike casseroles presented in restaurants or and takeaway displays. The XY is not pie like, it is not topped with a vegetable (or other) topping as is expected of XY pies.

However the Y dish is simply Y with a fine sauce; as quoted above, the food guide notes that ‘cooked pasta dishes sold complete with sauce' are prepared meals. As such this product is a prepared meal and excluded from GST-free status by Item 4 of Schedule 1.