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Edited version of your written advice
Authorisation Number: 1013104064523
Date of advice: 7 November 2016
Ruling
Subject: GST and ABC soups
Question
Is the supply of ABC soups (products) GST-free?
Answer
Yes.
Under section 38-2 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a supply of food is GST-free. The meaning of the term food for GST purposes is defined in section 38-4 of the GST Act. This definition of food includes food for human consumption, whether or not it requires processing or treatment.
Your product is food for human consumption. The product is reheated in the microwave, or steamed and consumed in the state in which it is sold, and therefore satisfies the definition of food under section 38-4 of the GST Act.
However, under paragraph 38-3(1)(c) of the GST Act, certain supplies of food are not GST-free if it is food of a kind specified in the third column of the table in Schedule 1 of 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 and more specifically, item 4 lists food that is not GST-free:
food marketed as a prepared meal, but not including soup.
The definition of soup in the online Oxford Dictionary is 'a liquid dish, typically savoury and made by boiling meat, fish or vegetable, etc, in stock or water'
The product is not food listed, or of a kind listed, at any of the items in Schedule 1. Additionally, they are not food that is a combination of one or more foods at least one of which is food of such a kind. Hence, the product is not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act.
Additionally, the product is not excluded from being GST-free by virtue of any of the other paragraphs of subsection 38-3(1) of the GST Act. Therefore, the product is GST-free under section 38-2 of the GST Act.
Relevant facts:
You are registered for the goods and services tax (GST).
You are a producer of ABC soups. You sell the products to ABC groceries in Australia. You state that the product is enjoyed with a bowl of rice. You rely on words of mouth from consumers as a form of advertisement/marketing for the products.
Samples were produced with list of ingredients, cooking instruction and storage instruction.
You state that the products are consumed with rice. This was confirmed via our search on the internet with similar products.
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 paragraph 38-3(1)(c)
A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(a)
A New Tax System (Goods and Services Tax) Act 1999 Schedule 1