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Edited version of private advice
Authorisation Number: 1051961964704
Date of advice: 16 March 2022
Ruling
Subject: GST classification of food products
Question
Is the supply of the Product GST-free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No. The supply of the Product is not GST-free under section 38-2 of the GST Act.
Relevant facts
You are an Australian entity which is registered for GST
You manufacture and supply pork crackling ('the Product').
The Product is slow cooked cracklings.
The Ingredients in the Product are Pork Skin, Pork Fat & Sea salt.
You provided samples, photos of the Products and the marketing.
The Products are low, carb, high protein and savoury snacks.
The Products ae marketed as crunchy pork crackling.
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 paragraph 38-3(1)(c)
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 clause 1 table Item 15
Summary
The supply of the Product is not GST-free under section 38-2 of the GST Act.
The supply of the Product is a taxable supply under section 9-5 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 (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act).
The Products are food for human consumption under paragraph 38-4(1)(a) of the GST Act.
However, paragraph 38-3(1)(c) of the GST Act provides that a supply of 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). As such, the issue is whether the Products are 'food of a kind' specified in Schedule 1.
The food category in Schedule 1 that is relevant for consideration is 'savoury snacks', the item listed in Schedule 1 that is of relevance in this case is item 15 which states:
|
Item |
Category |
Food |
|
15 |
Savoury snacks |
potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips |
The foods listed in Item 15 are snack foods that have undergone a cooking process and share certain other characteristics such as crispness.
We consider the Product is snacks that is listed under item 15 of Schedule 1 as it satisfies the following characterises of item 15:
• The Product is a slow cooked pork crackling and savoury snack food.
• The Product is marketed as a low carb, high protein, and delicious savoury snack
• From the samples provided, the Product is:
similar to products listed under item 15 in texture being crisp and crunchy.
bite sized and eaten in the same manner as products listed in item 15 that is, as a snack from a packet similar to eating from a packet of chips.
• The Product is packaged in variety of serve packs.
• The Product is cooked, ready to eat.
Taking all the above factors into account, we consider that the Products possess the characteristic of snack foods mentioned in item 15. That is, the 'overall impression' is that they are pork crackling specified in item 15, hence covered by item 15.
As the Product is covered by Item 15 and it is excluded from being GST-free under paragraph 38-3(1)(c) of the GST Act. Therefore, the supply of the Product is not GST-free under section 38-2 of the GST Act.
The supply of the Product is a taxable supply as all the requirements of section 9-5 of the GST Act are satisfied as follows:
• you supply the Product for consideration
• the supply is made in the course or furtherance of an enterprise that you carry on
• you supply the Product in Australia
• you are registered for GST, and
• the supply of the Product is neither GST-free nor input taxed.