Edited version of your written advice

Authorisation Number: 1012896074894

Date of advice: 15 October 2015

Ruling

Subject: Goods and services tax (GST) and food

Question 1

Is GST payable on your sale of the products?

Answer

No.

Question 2

Is GST payable on your importation of the products?

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You supply food products to food service distributors.

You import and sell the following food products in Australia:

(List of products, and their ingredients)

The products are partially cooked and frozen.

The manufacturer's website suggests consuming the products as a snack or combining with vegetables in order to make a meal.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 13-5

A New Tax System (Goods and Services Tax) Act 1999 Section 13-10

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 decisions

Question 1

Summary

Your sales of the products are GST-free sales of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

GST is payable 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 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.

(*Denotes a term defined in the GST Act)

The indirect tax zone is Australia.

You meet the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

• you supply the products in question for consideration

• you supply the products in the course or furtherance of an enterprise that you carry on

• the supplies are connected with Australia, and

• you are registered for GST.

There are no provisions of the GST Act under which your sales of the products would be input taxed.

Therefore, what remains to be determined is whether your sales of the products are GST-free.

GST-free supplies of food

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.

'Food' is defined in section 38-4 of the GST Act to include, amongst other things, food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). The products considered in this ruling are food for human consumption and therefore, satisfy the definition of food in the GST Act.

Under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind that is specified in clause 1 of Schedule 1 to the GST Act (Schedule 1). The foods that are considered in this ruling are not specifically listed in Schedule 1. As such, the issue is whether each of these food products are a 'food of a kind' specified in Schedule 1.

Item 4 in the table in Schedule 1 lists 'food marketed as a prepared meal, but not including soup'.

The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning.

The Macquarie Dictionary defines 'meal' as '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'.

A prepared meal is something that is capable of being a meal in itself.

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 take-aways and restaurants

• require refrigeration or freezing for storage, and

• are marketed as a 'prepared meal'.

The EM at paragraph 1.33 provides examples of prepared meals:

• prepared meals, such as curry and rice dishes, mornays 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

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

All of the above meals, except for the sushi, are of a kind that are duly assembled, cooked or partly cooked and require heating and completion of the cooking process for them to be ready for consumption. Sushi is by its nature ready for consumption when it is duly assembled even though part of it is raw.

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). In addition, if the food is cooked or partly cooked and is to be served hot, it should only need heating, which may include completion of the cooking process, to be ready for consumption. Heating is taken to mean warmed in the microwave oven, convection oven, frying pan, wok or saucepan.

Further to the above, 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

• how the goods are distributed.

We do not consider that the products in question are food marketed as prepared meals, because the manufacturer's website suggests consuming the products as a snack or combining with vegetables in order to make a meal. This marketing promotes each product as:

• food to be consumed as snacks; or

• alternatively, a meal component, rather than as a complete meal/complete meals in its own right.

Therefore, the products are not covered by item 4.

Product X is not within the scope of item 22 in the table in Schedule 1 as it is not in the form of a pie and it is not one of the other foods listed at that item.

The products in question are not covered by any of the items in Schedule 1. Therefore, the exclusion at paragraph 38-3(1)(c) of the GST Act does not apply.

None of the exclusions in subsection 38-3(1) of the GST Act apply. Therefore, your sales of the products in question are GST-free under section 38-2 of the GST Act. Hence, GST is not payable on your sales of the products.

Question 2

GST is payable on taxable importations.

Subsection 13-5(1) of the GST Act states:

You make a taxable importation if:

(b) goods are imported; and

(c) you enter the goods for home consumption (within the

meaning of the Customs Act 1901).

However, the importation is not a taxable importation to the extent

that it is a *non-taxable importation.

Section 13-10 of the GST Act states:

An importation is a non-taxable importation if:

(a) it is a non-taxable importation under Part 3-2 of the GST Act, or

(b) it would have been a supply that was *GST-free or *input taxed if it had been a supply.

Your sales of the products in question are GST-free. Therefore, your importation of these products are non-taxable importations under paragraph 13-10(b) of the GST Act.

Hence, GST is not payable on your importation of the products.