ATO ID 2004/695: GST and plain oriental buns
Date of decision: 13 June 2002
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 plain oriental buns?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies plain oriental buns.

Facts
The entity is a food supplier. The entity supplies plain oriental buns. The ingredients of the buns are flour, water, sugar, and yeast. The product is not sold hot and is not for consumption on the premises from which it is supplied. 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 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). As they are food for human consumption plain oriental buns satisfy the definition of food in paragraph 38-4(1)(a) 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). Item 27 in Schedule 1 (Item 27) specifies 'bread (including buns) with a sweet filling or coating'. Plain oriental buns have no sweet filling or coating. Therefore, plain oriental buns are not food of a kind specified at Item 27 and are not excluded from being a GST-free supply by paragraph 38-3(1)(c) of the GST Act. In addition, the supply of plain oriental buns 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 when it supplies plain oriental buns.

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 Schedule 1 clause 1 table item 27
Related ATO interpretative decisions: ATO ID 2002/32
Subject references: Goods and services tax GST free GST food Bakery products Food for human consumption