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Edited version of your written advice
Authorisation Number: 1012924607163
Date of advice: 9 December 2015
Ruling
Subject: Goods and services tax (GST) - desserts with cereals or cookies
Question 1
Is a supply of a specific dessert with cereals GST-free?
Answer
Yes.
Question 2
Is a supply of a specific dessert with cookies GST-free?
Answer
No.
This ruling applies for the following periods:
1 July 2015 to 30 June 2020
Relevant facts and circumstances
You are registered for GST.
You supply (brand name) a specific Dessert with cereals and (brand name) a specific Dessert with cookies to a supermarket chain in Australia.
The product is packaged in a single container that has less than five compartments. The compartments contain the dessert and the loose cereals or loose cookies.
The product is consumed by peeling the foil/seal, as there is only one foil/seal covering the whole container.
Each product weighs X grams and is required to be refrigerated and stored below Y°C but not frozen.
The products do not need to be heated, thawed or prepared in any other way before consumption.
The products are placed with the other dessert products in the refrigeration displays at supermarkets.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-40
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5
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 Schedule 1 table item 32
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 2
Reasons for decision
Question 1
Summary
Your supply of a specific dessert with cereals is a GST-free supply of food under division 38-A of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
Question 2
Summary
Your supply of a specific dessert with cookies is excluded from being a GST-free supply of food under division 38-A of the GST Act.
Detailed reasoning
Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make.
A supply is a taxable supply if all the requirements of section 9-5 of the GST Act are met. The requirements under section 9-5 of the GST Act are:
(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 are providing refrigerated dessert products for consideration and in the course of your enterprise. The dessert products are supplied in Australia and you are registered for GST. Therefore, the supply of dessert product satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act.
There is nothing in the GST Act which would make your supply of dessert products input taxed. Thus, we need to consider if the supply is GST-free.
Division 38 of the GST Act specifies the types of supplies that are GST-free.
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 (whether or not requiring processing or treatment). Your dessert products are food for human consumption and satisfy the definition of food in paragraph 38-4(1)(a) of 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 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.
ATO Interpretative Decision ATOID 2010/145 Goods and Services Tax - GST and dip with biscuits provides the view that a supply combining individual foods that are taxable and GST-free, but which are supplied in a single tray and are not separated by their individual packaging (for example a snack pack containing cheese and biscuits) is excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act, because it is 'a combination of food that contains a type of food specified in Schedule 1'.
Accordingly, we consider that the supply of a specific dessert with cereals or cookies is a supply combining individual foods which are supplied in a single container where each food is not packaged individually. A supply of these products is akin to a supply of a snack pack. As a result, the supply of a specific dessert with cereals or cookies would be excluded from being GST-free where the combination of the dessert and cereals or dessert and cookies contain a type of food specified in Schedule 1 of the GST Act.
A specific dessert with cereals
This product is a combination of a specific dessert and cereals.
The Detailed Food List published on the Tax Office website (Food List) provides that cereals, processed and supplied for human consumption, are GST-free as they are food for human consumption that is not of a kind specified in Schedule 1 of the GST Act.
On the same basis, the Food List also provides that specific desserts (including rice) are GST-free.
As specific desserts and cereals are GST-free, a combination of food that contains a specific dessert and cereals is also GST-free. Therefore, a supply of a specific dessert with cereals is a GST-free supply.
A specific dessert with cookies
This product is a combination of a specific dessert and cookies.
As outlined above, specific desserts are GST-free.
However, cookies or food that is, or consists principally of cookies are not GST-free due to item 32 of Schedule 1 to the GST Act which excludes food that is, or consists principally of, biscuits, cookies, crackers, pretzels, cones or wafers from being GST-free.
The Food list provides that cookies (supplied hot or cold or requires cooking, heating, thawing or chilling prior to consumption) are taxable because Schedule 1, item 32 and clause 2 of the GST Act apply.
Therefore, a supply of a specific dessert and cookies is a taxable supply as it is a supply of combination of food that contains a type of food specified in Schedule 1.