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Edited version of your written advice
Authorisation Number: 1012994541538
Date of advice: 7 April 2016
Ruling
Subject: Goods and services tax (GST) and pizza bases
Question 1
Is GST payable on your sales of pizza bases A?
Answer
No.
Question 2
Is GST payable on your sales of pizza bases B?
Answer
No.
Relevant facts and circumstances
You are registered for GST.
You make and sell pizza bases to customers.
You market the products as pizza bases under a specified name. The labelling and packaging of the products refers to the products as pizza bases.
You have provided details of the ingredients.
The pizza base products are savoury. They do not have a sweet filling or coating.
You provided information on how the products are prepared.
You supply the products frozen.
The pizza bases are sold to the customers without any toppings. They require the addition of toppings by the customers that you sell to in order to make a pizza.
You do not supply the products for consumption on your premises.
You provided photos of the products to the Australian Taxation Office (ATO).
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 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
Reasons for decisions
Questions 1 and 2
Summary
Your supplies of the pizza bases are GST-free supplies 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 taxable supplies that you make.
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.
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 ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act).
Your products are ingredients for food for human consumption (as they are ingredients for pizzas) and therefore they are covered by paragraph 38-4(1)(b) of the GST Act.
However, paragraph 38-3(1)(c) of the GST Act provides that a supply of a food is not GST-free if it is food of a kind 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.
The relevant item in Schedule 1 to consider in your case is item 3 - pizzas, pizza subs, pizza pockets and similar food.
In accordance with the Interpretative Decision ATO ID 2008/132, the common characteristics of pizzas, pizza subs and pizza pockets are:
• Pizza, pizza subs and pizza pockets are designed to be ready to eat, and do not require the addition of fillings or further toppings and ingredients. Unlike bread rolls, they are generally not capable of being cut and filled.
• Pizza, pizza subs and pizza pockets are prepared using a dough base that generally has a higher percentage of oil, and a lower percentage of yeast, than traditional bread dough. This dough base is sometimes referred to as 'pizza dough'.
• The filling or topping of pizza, pizza subs or pizza pockets is significant in relation to the whole. As a general rule of thumb, significant is considered to be 30% or more, by depth of the topping, as compared with the depth of the whole product.
ATO ID 2008/132 also states that a food product, which is not identical to pizza, pizza subs or pizza pockets, may be covered under item 3 as 'similar food', if it is food for human consumption that has a general likeness or resemblance to pizza, pizza subs and pizza pockets. To be considered 'similar food', a product should have all of the three common characteristics of pizza, pizza subs and pizza pockets, as listed above.
In accordance with the ATO Detailed Food List, pizza bases are GST-free.
The products in your case are pizza bases. These products are not designed to be ready to eat; they require the addition of toppings by the customers that you sell to in order to make a pizza. Therefore, they are not pizzas or products similar to pizzas, pizza subs or pizza pockets. Hence, your products are not covered by item 3.
Your pizza bases as detailed in this ruling are not food of a kind listed in Schedule 1. 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 supplies of the pizza bases are GST-free under section 38-2 of the GST Act.
Hence, GST is not payable on your supplies of the pizza bases.