Edited version of private advice

Authorisation Number: 1052363019701

Date of advice: 18 March 2025

Ruling

Subject: GST - supply of Food A

Question

Is the supply of the Food A GST free pursuant to section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

Relevant facts and circumstances

You manufacture the Food A that are made of raw uncooked XXXX and raw seasoned XXXX filling that is supplied chilled and ready to cook.

The production process for the Food A is as follows:

•                     make raw filling with raw XXXX and other ingredients

•                     thaw the frozen uncooked XXXX and then cut XXXX sheet

•                     raw filling deposited on XXXX sheet

•                     XXXX folds over to enclose raw filling, ensuring edges of XXXX are overlapping

•                     add scoring and toppings as applicable

•                     add baking paper to tray

•                     put raw and uncooked Food A in tray

•                     seal tray and metal detect

•                     add label and place in carton.

The Food A consists of raw XXXX filling, made of XXXX with added herbs and spices, rolled in a sheet of XXXX. Both ends of the rolled product are open with the XXXX filling visible.

The Food A have to be kept refrigerated and stored below 5°C.

The Food A need to be fully cooked before consumption.

The Food A can be cooked in a preheated oven to a certain temperature. It is optional to brush the top of Food A with an egg wash. The Food A can be place on a baking tray and baked in oven for a certain time or until fully cooked.

The Food A are sold in supermarkets and placed in the XXXX section.

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)(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).

A New Tax System (Goods and Services Tax) Act 1999 Schedule 1, Clause 1, item 22.

Reasons for decision

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 to include food for human consumption (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). The Food A are food for human consumption, and therefore, satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-3(1)(c) provides that a supply of food is not GST-free if it is food 'of a kind' listed in the third column of the table in clause 1 of Schedule 1 (Schedule 1).

Therefore, it needs to be considered whether the Food A are a 'food of a kind specified in Schedule 1.

The item in Schedule 1 that is of most relevance to this case is item 22 which lists 'pies (meat, vegetable or fruit), pasties and sausage rolls'.

The phrase 'of a kind' is not defined in the GST Act. The phrase was considered Lansell House Pty Ltd & Anor v FC of T 2011 ATC 20-239 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...

In coming to its decision, Lansell also considered, among other things, the product's

•                     use

•                     in store display

•                     marketing and

•                     appearance.

Accordingly, a product will be of a kind if it is of the same nature or character (possessing the same distinguishing qualities) as the class or genus in question.

The Macquarie Dictionary Online www.macquariedictionary.com.au defines 'Food A' as 'a XX of baked XXXX filled with XXXX.

Your products are called 'Food A" and have the appearance of Food A. They consist of a raw mix of ground XXXX (with the addition of herbs and spices) that is rolled up in a sheet of XXXX. The manufacturing process is that of Food A. That is, the ingredients for the fillings are prepared and combined and the filling is deposited on the XXXX. Both ends of the rolled product are open with the XXXX filling visible. The Food A products have the characteristics of a Food A and therefore, of a kind of listed in item 22.

The placement of the Food A in the store next to GST-free fresh XXXX products is not a determinative factor in this case.

Clause 2 of Schedule 1 of the GST Act operates to ensure that food listed at item 22 is not GST-free regardless of whether it is supplied hot or cold, or require cooking, heating, thawing or chilling prior to consumption.

Therefore, although the Food A are supplied chilled and raw, they are still food of a kind listed in Schedule 1. As such, you are not making a GST-free supply under section 38-2 of the GST Act when you supply the Food A.