Edited version of private advice

Authorisation Number: 1052303447458

Date of advice: 15 January 2025

Ruling

Subject: GST - prepared meals

Question 1

Is the supply of the 5 Products GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

GST-free supply

Your supply of Product 3 is a GST-free supply under section 38-2 of the GST Act because Product 3:

•                     is food for human consumption and satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act, and

•                     is not excluded from being GST-free by section 38-3 of the GST Act.

Taxable supply

Your supplies of Products 1, 2, 4 and 5 are supplies of 'food marketed as a prepared meal' or of a kind of 'food marketed as a prepared meal' within the meaning of Item 4 in Schedule 1 of the GST Act, and hence are taxable supplies.

Relevant facts and circumstances

You are registered for GST.

You supply to grocery stores and supermarkets in Australia

You are currently importing and selling the 5 products (Products) on a wholesale basis to a supermarket in Australia.

Your website contains information about the products.

You have provided the price, the labelling and photos of the outer package. There are components inside each package which are packaged separately. The labelling includes the names of the Products, the ingredient lists, the nutritional information, direction to prepare/combine components before consumption, and direction to store.

The Products are sold in the refrigerated area of the supermarket. The manufacturing process shows that the ingredients of the Products are cooked.

The Products can be consumed on their own, there is no suggestion to serve the Products with anything else.

In some cases, there are added water and oil in the heating process of the Products. Some stirring is required.

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 paragraph 38-3(1)(a)

A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(b)

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 paragraph 38-4(1)(a)

Reasons for decision

Relevant Legislation

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.

It is accepted that all five Products fall within the definition of food for human consumption (paragraph 38-4(1)(a) of the GST Act).

Pursuant to paragraph 38-3(1)(c) of the GST Act, food is not GST-free under section 38-2 of the GST Act if it is a supply of 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.

Relevant to paragraph 38-3(1)(c) and all the Products, is the category of 'Prepared food' in Schedule 1 and more specifically, Item 4 which is 'food marketed as a prepared meal, but not including soup'.

Applicable to prepared food and meals, are clauses 2 and 3 of Schedule 1 which state:

2 Prepared food, bakery products and biscuit goods

For the purpose of determining whether particular food is covered by any of the items in the table relating to the category of prepared food, bakery products or biscuit goods, it does not matterwhether it is supplied hot or cold, or requires cooking, heating, thawing or chilling prior to consumption.

3 Prepared meals

Item 4 in the table only applies to foodthat requires refrigeration or freezing for its storage.

The Products require refrigeration for their storage. Clause 2 and clause 3 of Schedule 1 are satisfied, and they do not preclude the Products from being covered by Item 4.

As such, it is necessary to consider whether the Products are food of a kind that is marketed as a prepared meal in section 38-3(1)(c) of the GST Act.

Case law related to food classification issues

The Federal Court (in the first instance) in Lansell House Pty Ltd & Anor v FCT [2010] FCA 329 (Lansell House 2010) considered whether a product known as 'mini ciabatte' was taxable.

Sundberg J concluded at paragraphs 108 to 109 that the product was not GST-free as follows:

284.       Classification decisions for sales tax, GST and VAT purposes are often described as questions of fact and degree (Ferrero at 884), value judgments (Procter & Gamble at [13]), a matter of impression (Procter & Gamble at [19]) and a combination of fact finding and evaluative judgment (Procter & Gamble at [47]). In Procter & Gamble the VAT and Duties Tribunal did not "grade" the relevant factors in coming to its decision. It stood back and took all the factors of appearance, taste, ingredients, process of manufacture, marketing and packaging together in deciding the proper classification of "Regular Pringles". The Court of Appeal approved that approach. Lord Justice Jacob said at [19]:

285.       "It was not incumbent on the Tribunal in making its multifactorial assessment not only to identify each and every aspect of similarity and dissimilarity (as this Tribunal so meticulously did) but to go on and spell out item by item how each was weighed as if it were using a real scientist's balance. In the end it was a matter of overall impression."

286.       Adopting that approach, I am not persuaded that the Commissioner's classification of Mini Ciabatte as an item 32 product was wrong.

On appeal, the Full Federal Court in Lansell House Pty Ltd & Anor v. FCT [2011] FCAFC 6 (Lansell House 2011) held that the primary judge had not erred and dismissed the appellants' appeal. The Full Federal Court endorsed Sundberg J's approach to food classification. At paragraph 24 the court stated:

Where the question to be answered as to the characterisation or classification of a product is one of fact and degree, as it was for biscuits in Ferrero, Lord Wolf MR said that it is a 'perfectly satisfactory statement of the approach' to be taken to consider different characteristics of the product and, if the product has the characteristics of two categories, to place it in a category in which it has sufficient characteristics to qualify (at 885). As Jacob LJ said in Procter & Gamble at [14], this sort of question, being a matter of classification, 'is not one calling for or justifying over-elaborate, almost mind-numbing, legal analysis. It is a short practical question calling for a short practical answer'. In a case where scientific analysis does not form part of the characterisation of the product, its classification is not a scientific question.

This approach was recently endorsed by the Full Federal Court in Comptroller General of Customs v Pharm-A-Care Laboratories Pty Ltd [2018] FCAFC 237 as follows at paragraph 24(2):

Secondly, subject to statutory context, function or purpose, courts should be cautious of subjecting words in legislation that have an ordinary everyday meaning to intensive analysis. Decision-makers should use 'their local knowledge, experience of the world and common sense, to give a sensible interpretation' to the words used; an appellate court 'required to review such decisions should endorse those that have been reached and confirmed in this way': Lansell House Pty Ltd v Federal Commissioner of Taxation [2010] FCA 329; 76 ATR 19 ('Lansell House') at [57] per Sundberg J (upheld on appeal at (2011) 190 FCR 354 per Bennett, Edmonds and Nicholas JJ); Seay v Eastwood [1976] 1 WLR 1117 ('Seay v Eastwood') at 1121 per Lord Wilberforce.

Consistent with the above approach is the leading Sales Tax decision in respect of the classification of food, by the High Court in Herbert Adams Pty Ltd v. FCT 47 CLR 222. The issue in this case was whether the product at issue described as 'sponge' was 'pastry but not including cakes or biscuits'. The taxpayer sought to argue that with reference to the trade meaning, sponge was a pastry and not a cake. The High Court in finding for the Commissioner, accepted the ordinary meaning of cake which included sponge. Evatt J at pages 229-230 said:

Samples of the appellant's manufacture were produced, and in my opinion the goods made were undoubtedly "cakes." According to the Oxford Dictionary a "sponge" is "a very light sweet cake made with flour, milk, eggs and sugar." A dictionary reference may not be necessary. Perhaps this is one of the few things that every schoolboy knows.

What is required in food classification cases, as the courts inform us, is a common sense, practical approach to form an overall impression. Not an overly pedantic, highly legal or scientific analysis.

Whether a product is food of a kind marketed as a prepared meal

In Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115 (Simplot), the Federal Court considered the GST treatment of a range of frozen food products supplied or imported by Simplot Australia Pty Limited (Simplot Australia).

In Simplot, the Court found that all the products were food of a kind marketed as a prepared meal (other than soup) and therefore they were not GST-free. In determining whether a product is food of a kind marketed as a prepared meal, the Court held that the statutory question is a 'single composite question' - that being, is the product food of a kind that is marketed as a prepared meal?

Answering the statutory question requires considering what is meant by food being food of a kind marketed as a prepared meal, followed by an assessment of whether the product in question falls within that class or genus.

The question is not whether the product itself is marketed as a prepared meal, but whether the product is a member of a class or genus of foods that are marketed as prepared meals. This means it is necessary to consider the kinds of food that are marketed as a prepared meal.

The attributes of a prepared meal and the kinds of food that are marketed as a prepared meal are to be determined by common sense and common experience. This is to be determined objectively by considering the attributes of products that are marketed as prepared meals, including quantity, composition and presentation.

Whether a particular product falls within the class or genus of foods that are marketed as prepared meals cannot be determined by viewing individual attributes in isolation or without context. The test is how the product as a whole is perceived objectively, informed by common sense and common experience, and an overall consideration of its attributes.

The test of 'common sense and common experience' is a composite objective judgment to be made against what is understood and observed by people generally. Application of the test depends on how reasonable people are taken to understand the attributes of the class or genus as well as the attributes of the particular product in question. The test is not concerned with narrow perceptions or fringe views.

Whether the product in question is 'food of a kind marketed as a prepared meal' requires an overall assessment of how that product and similar ones are marketed across the food industry. As a matter of common sense and common experience, how are products of that kind marketed? What do the facts and evidence tell people generally about how products of this kind are marketed by entities in the food industry, including supermarkets, grocery stores, food courts, takeaway outlets, cafes, and restaurants?

Of a kind

The words 'of a kind' are words of expansion rather than limitation. They have the effect that the question is not whether the product is the particular item of food specified in column 3 of the table in Schedule 1, but whether the product belongs to a class or genus of food specified by the item.

In Lansell House 2011, the Full Federal Court was satisfied that mini ciabatta was 'of a kind' of the cracker genus, after taking into account the characteristics of the product. At paragraph 30 the court stated:

...The word "kind" is appropriately used to denote a genus, class or description (Commonwealth of Australia v Spaul (1987) 74 ALR 513 at 516 per Davies, Lockhart and Neaves JJ). 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... The question is whether the resulting product comes within the genus, class or description of a cracker.

In Simplot, the Court discussed whether the product is a member of a class or genus of foods that are marketed as prepared meals. At [98-99], the Court applied Cascade at [16] and Lansell House 2011 at [30].

A product may be of a kind marketed as a prepared meal even if it does not share all of the attributes of food of that kind. For example, in Simplot, the Court found that the use of cauliflower as a substitute for rice did not prevent the relevant 'VeggieRice' products from having the character of fried rice or risotto - Simplot at [140].

Equally, a product is not of a kind marketed as a prepared meal merely because it is an ingredient or component of food of that kind. For example, many prepared meals include peas, but frozen peas, on their own, are not food of a kind marketed as a prepared meal. Being of the same kind requires more than just having a common ingredient.

In determining whether a product is of a kind marketed as a prepared meal, it does not matter whether the product may also be of some other kind - Simplot at [130] and Lansell House 2011 at [7]. For example, the fact that the products could be described as food marketed as a meal component or side dish did not mean they could not also be food of a kind that is marketed as a prepared meal - Simplot at [130].

Similarly, the fact that a product is marketed as a snack does not mean it could not also be food of a kind marketed as a prepared meal. Determining whether a product is a side dish, meal component or snack will not assist in answering the statutory question, which is whether the product is food of a kind marketed as a prepared meal.

Marketed as

In determining whether a product is food of a kind marketed as a prepared meal, it is necessary to consider the kinds of food that are marketed as a prepared meal. The marketed use of a product is to be determined objectively, having regard to what a reasonable observer would understand from the content of the marketing.

The marketing of a product involves the end-to-end process where products are put onto the market. This includes promotional and sales activities. The content of the marketing is what those activities objectively convey to the market.

Marketing includes labelling (including the name), packaging, display, product placement, promotion and advertising. Marketing does not include internal activities of the seller, nor is it determined by the subjective intention or motivation of the seller. These things do not convey any message to the market.

Marketing of food products can occur at different points across the supply chain. The activities of all suppliers in the supply chain will be relevant, including the manufacturer, importer, wholesaler and retailer in each case. The marketing activities carried out by competitors in the market are also relevant to identifying the class or genus of products marketed as a prepared meal. A product will have the same GST treatment, whether it is sold at the wholesale or retail level, especially where there is no change in the product between points of sale.

The statutory question is not whether the product itself is marketed as a prepared meal. If a product is of the same kind as food that is marketed as a prepared meal, it does not matter if its own marketing does not represent it as a prepared meal.

While it is not determinative, the marketing of the product itself remains relevant. Where a product is marketed as a prepared meal, this is a strong indicator that the product is food of a kind marketed as a prepared meal.

Whether a product is, in fact, marketed as a prepared meal cannot be determined by looking at individual aspects of the product's marketing in isolation. For example, a chicken cordon bleu product may be described on its packaging as being 'perfect for dinner', but this alone does not mean the product is being marketed as a prepared meal. On the other hand, a macaroni and cheese product that is described as 'All you need for dinner' and is designed to be heated and eaten directly from the packaging is being marketed as a prepared meal.

While a product's own marketing may be a strong indicator that a product is food of a kind marketed as a prepared meal, it is not determinative. It is still necessary to consider the other attributes of the product. For example, if a product is not of a sufficient quantity for a meal, or is not sufficiently prepared, it will not be food of a kind marketed as a prepared meal.

The test does not require that food of the relevant kind be solely or principally marketed as a prepared meal. However, as the Court in Simplot emphasised, application of the statutory test must be informed by common sense and common experience.

In applying this test, it is not appropriate to have regard to obscure or isolated incidences when determining whether a product is food of a kind marketed as a prepared meal. For example, an isolated instance of a plain yoghurt product being marketed as a prepared meal would not result in that product, or all plain yoghurts, becoming food of a kind marketed as a prepared meal.

Prepared meal

The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning.

Macmillan Publishers Australia, the Macquarie Dictionary www.macquariedictionary.com.au online,accessed 24 September 2021, defines 'prepare' in relation to food as:

2. to get ready for eating, as a meal, by due assembling, dressing or cooking.

and 'meal' as:

noun 1. one of the regular repasts of the day, as breakfast, lunch, or dinner.

2. the food eaten or served for a repast.

Essentially, a prepared meal needs to be a 'repast ready for eating'.

TheFurther Supplementary Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998('the EM') provides that the term 'prepared meal' is intended to cover a range of food products that:

•                     directly compete against take-aways and restaurants;

•                     require refrigeration or freezing for storage (clause 3 of Schedule 1); and

•                     are marketed as a 'prepared meal'.

Specifically, the EM at [1.19] states that food covered by the 'restaurant, take-away and prepared meals' exclusion:

... includes some types of food that would be sold by take-away outlets (eg. sandwiches) as well as food that is essentially the same as that sold by take-away outlets (eg. frozen pizzas). It also includes frozen meals which are sold in a form that just requires heating for consumption (eg. a TV dinner or a low fat dietary meal).

At [1.31] the EM states that the category of prepared food as listed in new Schedule 1A is intended to cover a range of food products that directly compete against take-aways and restaurants.

In Simplot, the Court held that prepared meal took its ordinary meaning read in context. The Court held that the attributes of a 'prepared meal' are to be determined from common sense and common experience and include considerations of quantity, composition and presentation.

For a product to be food of a kind marketed as a prepared meal, it is not necessary for it to be:

(1)           called a 'prepared meal'

(2)           marketed for consumption on a particular occasion such as breakfast, lunch or dinner

(3)           packaged and described as a single serving, or

(4)           designed to be consumed directly out of its packaging - Simplot at [119], [139-140].

A product may be food of a kind marketed as a prepared meal while also being food of a kind marketed as a meal component - Simplot at [130]. However, in practice, many meal components will not possess the necessary attributes that would make them food of a kind marketed as a prepared meal.

A product will be food of a kind marketed as a prepared meal if it is the kind of food that, as a matter of common sense and common experience, is marketed as a prepared meal. This is determined objectively by considering the attributes of the product, including quantity, composition and presentation.

Each attribute is considered in further detail below.

Quantity

In Simplot, at [124], the Court held that a meal involves a 'quantity of substance'.

The following considerations are relevant regarding the quantity of a product:

•                     The product need not be a substantial or big meal - a light or small meal is still a meal.

•                     What will be a 'quantity of substance' will vary based on the product in question.

•                     The product may be marketed as a snack, or a kind of food that can be eaten as a snack, and still be food of a kind that is marketed as a prepared meal.

•                     The product may be supplied in large quantities and may still be food of a kind marketed as a prepared meal. In Simplot at [139] the Court discussed in relation to a product that was not sold 'pre-portioned', the fact that it 'was entirely up to the consumer to determine how much or how little of the package was to be consumed on any one occasion', did not prevent the relevant product being food of a kind marketed as a prepared meal. There is no upper threshold on quantity.

As a matter of common sense and common experience, a product is not food of a kind marketed as a prepared meal unless it is of a sufficient quantity for a meal. This will depend on the facts.

The question is whether the total product is a sufficient quantity. This is not impacted by the recommended serving size described on the packaging or by individually wrapped portions or components within the product. It is the total weight of the product that is relevant - Simplot at [129], [134] and [138].

Example - quantity - large quantities

Wholesaler Ltd sells frozen beef lasagne in a range of sizes including 5 kg and 10 kg trays.

While the lasagne trays are not pre-portioned and are provided in quantities that are more than what one person would be expected to consume as a meal, neither of these factors affect whether they are food of a kind marketed as a prepared meal.

The lasagne trays have the attributes of a prepared meal, including sufficient quantity, composition and presentation. As a matter of common sense and common experience, lasagne is a kind of food that is marketed as a prepared meal.

The lasagne trays are food of a kind marketed as a prepared meal.

Composition

In Simplot at [124], the Court held that a prepared meal involves food consisting of more than one ingredient or element. A product is more likely to be food of a kind marketed as a prepared meal where it is made from multiple ingredients or elements. It is a matter of fact and degree whether a particular combination of ingredients or elements constitutes a meal.

It is necessary to consider the nature of the ingredients or elements and not simply the number of ingredients or elements. In this context, we consider that 'ingredient' means something used as a component in making the food. In contrast 'element' means separately identifiable aspects of the food. For example, mashed potato is a single element but is made of multiple ingredients (potato, butter, milk). A product that includes some combination of protein, vegetables or a grain product (for example, pasta, rice or bread) is more likely to be of a kind marketed as a prepared meal.

In practice, applying common sense and common experience involves considering whether the product has a similar composition to products sold as a prepared meal by entities in the food industry. For example, in Simplot at [134-140], the Court characterised the products as pasta in sauce, risotto or fried rice and observed that these types of foods are, as a matter of common sense and common experience, foods of a kind marketed as a prepared meal.

Presentation

In Simplot at [124], the Court also held that a prepared meal involves a combination of foods that is 'complete'. This attribute was referred to as 'presentation'. A product's presentation will indicate it is food of a kind marketed as a prepared meal if it is presented as being complete. Being 'complete', in this context, involves both the degree of preparation and whether the product is supplied with all necessary inclusions to be a complete 'meal'.

First, the product should be 'complete' in the sense of being prepared and should require only limited further preparation, assembly and activity by the consumer. When determining whether a product is 'complete', the following principles are relevant:

•                     If a product is sold fully assembled, the fact that all or part of it may be raw does not prevent it from being sufficiently prepared, even if it requires cooking before consumption.

•                     If cooking or heating is required for the product to be ready for consumption, this should only require limited activity by the consumer, such as cooking or heating in a microwave, oven, frying pan, or saucepan. Simply heating a product and stirring regularly during the process will not mean, by itself, that the product is not sufficiently prepared. This will apply even where these activities are required to complete the cooking process for a partly cooked product. See Example as follows:

Example - presentation - sufficiently prepared

Manufacturer Ltd makes and sells a frozen pasta product containing chicken, vegetables, pasta and sauce. The product is sold in a 400 g bag and has been partly cooked. The instructions on the bag say that the product should be:

•                     microwaved in a covered microwave-safe container on high for 6 minutes, stirred, and microwaved for a further 4 minutes; or

•                     cooked in a covered pan on the stove-top for 15 minutes, stirring as necessary.

The pasta product has the attributes of a prepared meal, including sufficient quantity, composition and presentation. As a matter of common sense and common experience, pasta in sauce with chicken and vegetables is a kind of food that is marketed as a prepared meal.

While the pasta product is not fully cooked at the point of sale, this does not prevent it from being sufficiently prepared. Completion of the cooking process can be achieved by alternate methods, both of which constitute limited further preparation and activity by the consumer as the product is partly cooked at the point of sale.

The pasta product is food of a kind marketed as a prepared meal.

•                     Where a product requires one of the following actions by the consumer, particularly where more than one of these is required, this may point to a conclusion that the product is not sufficiently prepared:

­        chopping, peeling, or otherwise preparing the ingredients

­        cooking different ingredients or elements separately or using different methods, or

­        cooking a product which contains raw ingredients where this requires active involvement of the consumer. Active involvement includes actions like stirring, monitoring, adjusting temperature, and the staged addition of different ingredients. See the following example:

Example presentation - not sufficiently prepared

Wholesaler Ltd sells meal preparation kits that contain all the ingredients necessary to make a meal. Each kit is accompanied by step-by-step cooking directions. The Chicken Stir-Fry kit comes with raw chicken, fresh chopped vegetables, and a packet of sauce.

The product's presentation is not consistent with that of a prepared meal as it is not presented as complete. Even though the product is prepared to some degree and contains all the necessary ingredients for a meal, the ingredients require more than limited preparation, assembly and activity by the consumer before consumption. The chicken and vegetables are raw and cooking the product requires active involvement of the consumer, including stirring, monitoring, adjusting temperature, and the staged addition of different ingredients, to ensure the meal is fully cooked.

As a matter of common sense and common experience, a product containing raw chicken, fresh chopped vegetables, and a packet of sauce is not a kind of food that is marketed as a prepared meal.

The Chicken Stir-Fry kit is not of a kind marketed as a prepared meal.

•                     Some products, including sushi and salad products, are ready for consumption when sold even though part of them may be raw.

•                     Sometimes a single product is sold with some or all of the ingredients or elements separated from each other. The fact that a consumer needs to combine the ingredients or elements before consumption of itself does not mean that the product is not sufficiently prepared to be 'complete'. For example, a product will be sufficiently prepared if all the consumer needs to do is combine various salad ingredients or elements and dress the salad with a provided sachet of dressing -see the following example:

Example - Caesar salad kit (taxable)

Manufacturer Ltd makes and sells a Caesar salad kit containing bacon pieces, shaved parmesan cheese, croutons, cos lettuce and a sachet of dressing. The product weighs 200 grams. The different components are contained in separate internal packaging inside the outer bag and need to be combined before eating.

Second, the product should be presented as being 'complete' in the sense of being a complete meal. Whether a product is presented as a complete meal is a matter of fact and degree.

Where a product includes all required seasonings, sauces, or flavourings, this is an indicator that the product is presented as complete. Recommendations or instructions to add water or oil when cooking or heating do not mean that the product is not sufficiently prepared or complete.

A product may be presented, including by its own marketing, as a kind of food that is commonly eaten:

•                     on its own as a complete meal (for example, it may be presented as fried rice or risotto)

•                     as a meal component only (for example, it may be presented as mashed potato or chicken kiev)

•                     as an appetizer (for example, it may be presented as spring rolls, curry puffs, samosa, arancini balls, croquettes, calamari rings, prawn cutlets, or devilled eggs).

The following is another example of a complete presentation:

Example - presentation - sufficiently complete

In its refrigerated section, Retailer Ltd sells Easy Dumplings that contain 4 vegetable and 4 prawn dumplings in a microwavable container. The product weighs 250 grams. The product comes with a sachet of soy sauce.

The product has the attributes of a prepared meal, including quantity, composition and presentation. While not all products containing dumplings are food of a kind marketed as a prepared meal, this product is of a sufficient quantity and composition for a meal and is presented as being a complete meal that can be heated and eaten straight from the packaging.

As a matter of common sense and common experience, products packaged and presented this way, are food of a kind marketed as a prepared meal.

The Easy Dumplings product is food of a kind marketed as a prepared meal.

Application to the Products:

Name of the Products

The names of the Products indicate that the Products contain multiple elements from the different food groups. Further, the names of the Products convey to the consumer that the Products are products of which ingredients have been prepared, cooked and seasoned.

We consider that the names of the Products indicate to the consumer that the Products are capable of being a meal and is ready for consumption.

Additionally, the Products are a type of food that is similar to food listed in the EM, 'cooked pasta dishes sold complete with sauce', as food that is covered under Item 4.

Price of the Products

The prices of the Products are...Consumers may prefer purchasing the Products from the supermarket, especially if they are priced lower than similar products available at fast-food places or restaurants.

Considering this information, we believe the prices of the Products are set to attract buyers that may otherwise purchase similar products from takeaways.

Labelling on the packaging of the Products

The labelling indicates that the Products include a variety of ingredients such as ...and topping such as .... When the information on the label is considered together with the directions, it suggests that the Products are marketed as prepared meals.

Literature or instructions accompanying the Products

The ATO's view is that the size of a product is not determinative of whether a product is marketed as a prepared meal. The definition of a meal does not specify a particular size. The ordinary meaning of a meal does not distinguish between pricing, sizes of meals or composition. The context informs the meaning of 'prepared meals' as a range of restaurant or takeaway foods ready for consumption. A prepared meal, as ordinarily understood, can be large or small; contain any amount of kilojoules; be high or low in fats, protein or carbohydrates; contain meat or be vegetarian; or be gluten-free.

The Products are prepared and ready for consumption, as the ingredients are cooked, seasoned and supplied with sauce and toppings. Whilst this factor alone is not determinative of a product being marketed as a prepared meal, it is a strong indicator. A product that is supplied already cooked, complete with sauce and toppings, is considered 'prepared'. Furthermore, the Products have similarities to 'cooked pasta dishes sold complete with sauce' which is listed in the EM as a prepared meal.

The literature or instructions accompanying the Products show that they are prepared meals ready to eat. The Products' weight range between ...and ... with ...servings, which are similar to the typical sizes of prepared meals sold in the supermarket.

How the Products are packaged

The Products have different components contained in separate internal packaging within the outer bag.

The Products are supplied ready for consumption as all ingredients are supplied in separate internal packaging inside the outer bags. Consumers can open the bags with different components and do simple preparation to combine the components to have a meal ready for eating. The Products are considered reasonable alternatives to and compete with prepared meals offered by takeaways/restaurants.

The way that the Products are packaged is a strong indicator for a prepared meal.

Promotion and advertising of the Products.

Each product needs to be evaluated based on its own characteristics to form an overall impression and determine its GST classification.

The Products contain multiple elements from different food groups, such as protein, carbohydrates and vegetables, that have been cooked and prepared, along with a seasoning bag and toppings.

You promoted the Products by demonstrating how easy they are to prepare for consumption inside the supermarket. This demonstration shows how easy it is to combine the elements of the Products in a few steps before consuming.

This indicates that you marketed the Products as a prepared meal, ready to eat. Therefore, the Products are within the genus or class of what is generally understood to be food marketed as a prepared meal.

Distribution

The Products are placed in the refrigerated areas... There is little implication that this placement indicates whether the Products are marketed as a prepared meal or not.

Analysis for each of the Products:

In summary, we consider that all the Products satisfy the criteria for sufficient quantity, composition and presentation as defined in Simplot. Hence the Products have all the attributes of a prepared meal. Each serving of the Products consists of more than one ingredient or element, and a substantial amount. They include noodles or rice cakes with sauces and toppings, ready to be combined, and heated up before consumption. Below are composition details of each Product ....

Hence each of the Products are foods of a sufficient quantity, with a composition of more than one element and hence to be regarded by the ordinary person as being of a kind that are marketed as a prepared meal.

In relation to presentation, the Products are sufficiently prepared because they are presented as being complete. They require limited further preparation, assembly and activity by the consumer. They are sold fully assembled with all necessary inclusions and the ingredients are already cooked/partly cooked during the manufacturing process. The preparing process on the stove do not by itself amount to the products being insufficiently prepared....

Our conclusion

GST-free supply

Your supply of Product 3 is a GST-free supply under section 38-2 of the GST Act because Product 3:

•                     is food for human consumption and satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act, and

•                     is not excluded from being GST-free by section 38-3 of the GST Act.

Taxable supply

Your supplies of Products 1, 2, 4 and 5 are supplies of 'food marketed as a prepared meal' or of a kind of 'food marketed as a prepared meal' within the meaning of Item 4 in Schedule 1 of the GST Act, and hence are taxable supplies.