ATO ID 2008/132: GST and pizza/Italian rolls
Date of decision: 26 August 2008
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 supplies pizza rolls / Italian rolls?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies pizza rolls / Italian rolls.

Facts
The entity is a food supplier. The entity supplies food products known as pizza rolls / Italian rolls. The pizza rolls / Italian rolls form part of the savoury roll product range which includes cheese topped rolls and cheese and bacon rolls. These products are baked and supplied daily by the entity in addition to other bread products. They are not supplied for consumption on the premises. 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 from being GST-free by section 38-3 of the GST Act. Food is defined in paragraph 38-4(1)(a) of the GST Act to include food for human consumption (whether or not requiring processing or treatment). The pizza rolls / Italian rolls are food for human consumption and, therefore, satisfy the definition of food in paragraph 38-4(1)(a). 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 3 of Schedule 1 (Item 3) covers pizza, pizza subs, pizza pockets and similar food which are described as prepared food. The question at issue is whether pizza rolls / Italian rolls are similar food to these products and therefore subject to GST. The Tax Office, in consultation with relevant industry bodies, has considered this issue and has identified three common characteristics of pizza, pizza subs and pizza pockets. A food product, which is not identical to pizza, pizza subs or pizza pockets, may be covered under Item 3 as 'similar food', if it is food for human consumption that has a general likeness or resemblance to pizza, pizza subs and pizza pockets. To be considered 'similar food', a product should have all of the three common characteristics of pizza, pizza subs and pizza pockets, as listed above. The pizza rolls / Italian rolls are capable of being cut and filled, have a traditional bread dough base and have a topping of less than 30% compared with the depth of the whole product. The rolls do not share any of the three characteristics as listed above. It is considered that they are not food of a kind specified in Schedule 1. In addition, the supply by the entity of the pizza rolls / Italian rolls does 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.

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)(a) Schedule 1, clause 1, item 3
Other references: Policy paper: GST classification of similar food to pizza, pizza subs and pizza pockets (2008).
Subject references: Bakery products Food for human consumption Goods and services tax GST food