ATO ID 2003/876: GST and fillings for bakery goods and desserts
Date of decision: 25 August 2003
Business line: Indirect Tax

Issue
Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells flavoured fillings for bakery goods and desserts?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells flavoured fillings for bakery goods and desserts.

Facts
The entity is a food supplier. The entity supplies flavoured fillings for bakery goods and desserts. The fillings are fruit and cheese products that can also be used as toppings on bakery goods and desserts. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: 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 by section 38-3 of the GST Act. Food is defined in section 38-4 of the GST Act to include ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act). The flavoured fillings for bakery goods and desserts are ingredients for food for human consumption and therefore satisfy the definition of food in paragraph 38-4(1)(b) of the GST Act. However, under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Flavoured fillings are not food of a kind specified in Schedule 1. In addition, the flavoured fillings do not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells flavoured fillings for bakery goods and desserts.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-2 section 38-3 paragraph 38-3(1)(c) section 38-4 paragraph 38-4(1)(b) Schedule 1 clause 1
Subject references: Goods and services tax GST free GST food Bakery products Food for human consumption Ingredients for food