Edited version of your written advice

Authorisation Number: 1012982928578

Date of advice: 11 March 2016

Ruling

Subject: Goods and services tax (GST) and food

Question 1

Is GST payable on your sale of dessert X?

Answer

No.

Question 2

Is GST payable on the importation of dessert X?

Answer

No.

Relevant facts and circumstances

You are registered for GST.

You import into Australia and sell dessert X.

Dessert X is a ready to eat dessert product with a specific flavour. Its form and texture is similar to mousse. It does not contain flour, rice, tapioca or eggs and is an uncooked dairy based product.

The dairy ingredients constitute the vast majority of the product by weight. It is in the form of, and has the taste and ingredients of a dairy dessert.

Relevant legislative provisions

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

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 sale of dessert X is a GST-free sale 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 any taxably supply.

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 dessert X for consideration

• you supply the product 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 in the GST Act under which your sale of the product would be input taxed.

Therefore, what remains to be determined is whether your sale of the product is 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).

Dessert X is food for human consumption and therefore, satisfies 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 the third column of 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.

Item 20 in the table in clause 1 of Schedule 1 to the GST Act lists 'puddings' amongst other things.

Issue 13 of the Food Industry Partnership Issues Register on the Australian Taxation Office website considers the meaning of 'pudding'. It states that the term 'pudding' is not defined in the GST Act and is therefore afforded its ordinary meaning. Therefore, the word 'pudding' is defined to mean:

a cooked food that is a sweet or savoury dish made in many forms and of various ingredients, as flour (or rice, tapioca, or the like), milk and for eggs, with or without fruit, meat or other ingredients and is a cooked dish consisting of various sweet or savoury ingredients, especially as enclosed within a flour-based crust or mixed with flour, for eggs, etc., and boiled or steamed; a baked batter mixture.

Dessert X is not cooked. Therefore, it is not a pudding.

Dessert X is not covered by item 20 or any of the other items in Schedule 1 to the GST Act and is not food that is a combination of one or more foods at least one of which is food of such a kind.

Therefore, the exclusion at paragraph 38-3(1)(c) of the GST Act does not apply.

None of the other exclusions in subsection 38-3(1) of the GST Act apply. Therefore, your sales of dessert X are GST-free under section 38-2 of the GST Act. Hence, GST is not payable on your sale of this product.

Question 2

GST is payable on taxable importations.

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

You make a taxable importation if:

(a) goods are imported; and

(b) 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; or

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

taxed if it had been a supply.

Your sale of dessert X is GST-free. Therefore, your importation of this product is a non-taxable importation under paragraph 13-10(b) of the GST Act.

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