Edited version of private advice

Authorisation Number: 1051605759109

Date of advice: 4 December 2019

Ruling

Subject: GST and platters

Question

Is your supply of the Product a GST-free supply of food under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes.

Relevant facts and circumstances

You are a producer of meat products such as ham, bacon and smallgoods. You are registered for GST.

This is your website.

The ATO has obtained a sample Product. Description of the Product is presented here with labelling, ingredients, directions for use, nutritional table, etc.

The Product is advertised and sold in supermarkets alongside refrigerated cold meats.

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 Schedule 1

Reasons for decision

Summary

Based on the overall impression of the Product, the supply of the Product is a GST-free supply of food pursuant to section 38-2 of the GST Act

Detailed reasoning

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).

The Product satisfies the definition of food because it is sold as food for human consumption. Therefore the next thing to consider is whether it falls within any of the exclusions in section 38-3 of the GST Act.

Of relevance to your product is paragraph 38-3(1)(c) of the GST Act, which provides a supply of food is not GST-free if it is food of a kind that is specified in 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 phrase 'of a kind' is not defined in the GST Act. Accordingly, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary (1997) does not define the entire phrase 'of a kind' however, it defines the word 'kind' to mean:

'1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4 ...'

In sales tax cases and when determining the phrase 'of a kind', the Courts have determined the 'essential character of the goods'. Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part.

The GST case Lansell House Pty Ltd & Anor FC of T 2010 ATC 10851 (Lansell 2010) did not provide an essential character test, rather it provided an overall impression test. This case concerned a dispute between the importers of a product known as Mini Ciabatte and the Commissioner of Taxation regarding the classification of said product for GST-purposes. The Commissioner determine that Mini Ciabatte falls within item 32 (crackers) . In brief, Mini Ciabatte is a dry 'Italian Flat Bread' on which cheese or antipasto is placed. Sundberg J held that the words in item 32 are not used in a specialised or trade sense that differs from their ordinary usage, and that it is a matter of overall impression in deciding the proper classification of a product. Further, the Court held at para 109 that a supplier cannot, by a label (in that case, by describing the product on its packaging as 'Italian flat bread'), govern the classification of a product for the purposes of the GST Act.

In this regard, the case lawLansell House Pty Ltd & Anor v FC of T 2011 ATC 20-239 (Lansell 2011) at [30] relevantly provides:

The use of the words "of a kind" in s 38-3(1)(c) of the GST Act adds further generality to the description of the items described in Schedule 1: Air International Pty Ltd v Chief Executive Officer of Customs (2002) 121 FCR 149 per Hill J. Thus, a new product that does not possess all of the same characteristics of known crackers may nevertheless be within the relevant item.

Please note that this Federal Court decision has been upheld by the Full Federal Court, hence this quote from the Federal Court decision is still relevant.

Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question.

Item 5 in the table in clause 1 of Schedule 1 to the GST Act (Item 5):

We will now consider Schedule 1 to the GST Act. It is necessary to consider Item 5 of Schedule 1, which operates to tax the following:

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

https://www.ato.gov.au/Business/GST/In-detail/GST-issues-registers/Food-Industry-Partnership---issues-register/?page=5#Issue_5

Platters and other similar arrangements of food

Clause 1, Item 5 of Schedule 1 of the GST Act operates to subject platters and other similar arrangements of food to GST. Therefore, fruit and cheese and cheese and cabanossi platters will be subject to GST.

The term 'platter' is not defined in the legislation and therefore its ordinary meaning is to be adopted. 'Platter' is defined in the Macquarie Dictionary to mean:

'1. a large shallow dish, commonly oval, for holding or serving meat etc.'

Item 5 of Schedule 1 is referring to platters and arrangements of food that can be uncovered and placed on the table ready for serving (for example, as a catering product at parties, BBQs and so forth).

Example 1

Sammy's Supermarket sells pumpkin that is chopped into pieces ready for roasting. There are four to six pieces of pumpkin on a plastic tray covered in plastic wrap. This product is not considered to be a platter.

Example 2

David's Gourmet Foods supplies trays of gourmet food to customers for use at parties and other functions. One of these trays consists of an arrangement of antipasto products including, meats, sundried tomatoes, pickled vegetables, bread sticks and other items chosen by the customer. This product is considered to be a platter and subject to GST.

However, each of these items can also be sold individually. For example, the sundried tomatoes are also sold in separate plastic containers with a lid. The supply of the products in this way is not considered to fall within Item 5 of the GST Act. However, it would need to be ascertained whether the products are then subject to GST under one of the other items in Schedule 1 of the GST Act.

The Detailed Food List is a public ruling and gives the following guidance:

https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=GSTFBSearch#GSTFBSearch/questions

antipasto platter

Taxable

Schedule 1, item 5 of the GST Act applies

arrangements of food (platters)

Taxable

Schedule 1, item 5 of the GST Act applies

cheese platters

Taxable

Schedule 1, item 5 of the GST Act applies

cold cut platter

Taxable

Schedule 1, item 5 of the GST Act applies

fruit platter

Taxable

Schedule 1, item 5 of the GST Act applies

platters of cheese, cold cuts, fruit, vegetables and other arrangements of food

Taxable

Schedule 1, item 5 of the GST Act applies.

seafood platter

Taxable

Schedule 1, item 5 of the GST Act applies.

small goods platter

Taxable

Schedule 1, item 5 of the GST Act applies.

Vegetable platter

Taxable

Schedule 1, item 5 of the GST Act applies

Hence there is no requirement that there have to be other kinds of foods to make into a platter. An arrangement of food could be made out of one kind of food such as cheese, cold cuts, fruits or vegetables.

Application to your Product:

The Product consists of a selection of Foods from a range of smallgoods (the Foods).

The words 'Serving suggestions' is underneath a picture of a wooden board with a knife and the Foods in the Product plus other food products.

An arrangement of food means there is an element of food presentation or plating which involves: choosing the plate, the arrangement and the food served. The food served is probably a selection of contrasting texture, shape and flavour which would complement each other.

We consider that there is an element of plating/ arrangement of food, since:

·        The Foods have contrasting texture, shape and flavours, which may complement each other, when presented/packaged together for simultaneous consumption.

·        The name of the Product indicates it is a Plate.

·        On your website, the Product is marketed as foods ready to be served.

·        Consumers can just remove the sealed trays and uncover the Foods prior to serving.

However, the labelling of the package suggests that the Product should be served together with other food products to make into a plate. In addition the Product is sold on the same shelves with other smallgoods.

We agree with your contentions that the type of container/vessel that the Product is sold in or on should be taken into account for the purposes of Item 5.

Each of the Foods is packed in separate plastic-sealed trays within the Product.

The plastic trays which contain the Foods are of disposable nature, similar to how other products such as smallgoods are sold generally. It does not appear that the plastic trays are intended to be used to present the Foods for consumption.

Taking into account all the above, we consider that the overall impression of the Product is neither a platter of cold cuts nor other arrangements of food under Item 5.

As such, the supply of the Product is GST-free pursuant to section 38-2 of the GST Act.