Edited version of your written advice

Authorisation Number: 1012916681939

Date of advice: 30 November 2015

Ruling

Subject: GST and food board products

Question

Are your supplies of the food board products taxable?

Answer

Your supplies of the food board products are mixed supplies of GST-free food and taxable supplies of the non-food item

Relevant facts and circumstances

You are registered for goods and services tax (GST). You sell food board products.

You supply the food board products in the refrigerated section next to other individual foods.

All three products come in clear plastic packaging (a clear plastic box with individual indented segments for each item) and all the food items within the packaging are individually wrapped and are separately identifiable. Each food board product is adorned with a ribbon and promoted as a gift pack.

The foods are in blocks. The other foods are unsliced.

The packaging is not charged at a separate price and the value would be below either:

• $3 (excluding GST); or

• 20% of the total cost of the taxable supply

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

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Section 9-80

A New Tax System (Goods and Services Tax) Act 1999 Schedule 1

Reasons for decision

Summary

Your supplies of the food board products are neither platters nor arrangements of food. They are mixed supplies of GST-free sale of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and taxable supplies of the non food items under section 9-5 of the GST Act.

Detailed reasoning

Characterisation of the supplies:

Your food board products contain food (various kinds of food and various foods) and non food items.

We have considered whether the supplies would be considered a mixed supply or a composite supply according to Goods and Services Tax Ruling (GSTR) 2001/8.

 A mixed supply is a supply that contains two distinct parts. Where a mixed supply contains both taxable and non-taxable parts, GST in relation to the taxable parts must be accounted for.  

A composite supply is a supply that appears to have more than one part, but is essentially the supply of one thing.

The Food Industry Partnership - issues register provides the following:

https://www.ato.gov.au/Business/GST/In-detail/GST-issues-registers/Food-Industry-Partnership---issues-register/?page=26

Hampers

Paragraph 1.18 of the Further Supplementary Explanatory Memorandum to the GST Bill … states that where a mix of individually packaged goods is packed and sold together, these items are to be taxed individually. For example, where a hamper contains a packet of biscuits, a box of chocolates and a jar of coffee, the biscuits and chocolates are subject to GST and the coffee is GST-free. If there is a need to apportion the value of the hamper to each of the items to determine the GST payable, the rule in section 9-80 will be relevant.

A 'hamper' is defined in The Macquarie Concise Dictionary as 'a large basket or receptacle made from cane, wickerwork, etc., usu. with a cover'. Based on this definition, it is the ATO view that for the purposes of the GST Act a 'hamper' can be a basket, decorative box or other similar container, containing any number of separately identifiable products. A hamper will be sold for a single consideration.

Like a snack pack, a hamper will include various food items. It may also include things other than food. However, unlike a snack pack, the different products in a hamper are not designed to be combined or blended for simultaneous consumption.

For example a hamper may be a large cane basket consisting of tea, biscuits, champagne, chocolates, jam, Christmas pudding and mince pies. Where a hamper includes goods which are subject to GST and other goods which are GST-free, the value of the taxable goods will be calculated according to section 9-80 of the GST Act.

Where the basket or similar packaging has a lasting value (for example, a picnic basket), the supply of the basket may be subject to GST.

It should be noted, that where you are making a mixed supply the tax invoice need only show the value of the taxable supplies and the GST-free supplies and not an itemised list of all products contained in the hamper.

In light of this view, we consider that the supply of the food board products should be regarded as having more than one separately identifiable part and hence is a mixed supply.

We accept your contention that the food board products are hampers and the products contain items that are separately identifiable for GST purposes.

The foods in the hamper:

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 food for human consumption (paragraph 38-4(1)(a) of the GST Act).

The foods included in the food board products (various kinds of food and various foods) satisfy the definition of food because they are sold as food for human consumption. Fruit paste is similar to fruit spread and can be considered as condiment, which is listed as food under paragraph 38-4(1) (e) of the GST Act (goods to be mixed with or added to food for human consumption).

Therefore the food in the food board products will be GST-free unless they fall within any of the exclusions in section 38-3 of the GST Act. Of relevance to your circumstances is the exception under paragraph 38-3(1)(c) of the GST Act.

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 food that is a combination of one or more foods at least one of which is food of such a kind.

Schedule 1

We will now consider Schedule 1 for the food board products. It is necessary to consider Item 5 of Schedule 1, which operates to tax the following: 

"platters etc of food, cold cuts, fruit or vegetables and other arrangements of food"

Page 6 of the GST Food Guide states: 

A platter is defined as a large shallow dish, commonly oval, for holding or serving meat and other food items. Usually a platter or arrangement of food can be uncovered and placed on the table ready for serving (for example, a catering product at barbeques).

We agree with your contention that the foods contained in the food board products are not considered to be either a "platter" or "arrangement" as they contain blocks of different types of food blocks and various foods which are packaged and sold together. The foods are not individually cubed or sliced into bite size pieces and presented as a platter which can then be uncovered ready for serving.

As such, the supply of the foods in the food board products is not considered to be a platter or other arrangement of food as referred to in Schedule 1 of the Act.

In addition, the foods are not listed nor are they of a kind specified in Schedule 1 of the Act, hence they are GST-free food.

Taxable supply:

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) of the GST Act. That is, you will supply the food board products for consideration and in the course or furtherance of an enterprise that you carry on. Additionally, these supplies will be connected with Australia since you make the goods available in Australia; and you are registered for GST.

As mentioned above, the supplies of the food board products are mixed supplies. The foods are GST-free.

Since the supply of the non food items are neither GST-free nor input-taxed, you need to apportion the value of the food board products to each item to determine the GST payable amount of the supplies. The rule in section 9-80 of the GST Act will be relevant.

Conclusion:

The supply of the food board products will be partly taxable and partly GST-free and will be covered by the mixed supply rule in section 9-80 of the GST Act.