Private ruling: GST and food
Date of advice: 27 November 2017
Published: January 2018

Ruling: Q1: Are the supplies of your food products subject to goods and services tax (GST)? | A1: Your Food Products A and beverages Y will be taxable. Your Food Products B and your beverages X be GST-free. Your combination meals may be taxable, GST-free or mixed supplies depending on what is supplied. The food which is consumed on the supplier's premises will always be subject to GST.

Relevant facts and circumstances: ● You are GST registered entity conducting an enterprise in selling a variety of food products. ● You seek a ruling on your food products that include single food products and a combination of food products. ● This includes Food Products A, Food Products B, beverages X beverages Y and a combination of your meals with beverages X or Y. ● X beverages contain 90% or more volume of juice of fruits or vegetables. ● Y beverages contain less than 90% or more volume of juice of fruits or vegetables. ● There are seats allocated within the store itself for only your customers to sit on. ● There is no separate ordering and serving processes for dine-in and take away food. The same process is used for both dine-in and take-away customers. ● All products are served in disposal containers. ● There is only one menu and one price for all items. You do not have a separate eat-in menu. ● You are aware that all meals consumed on the premises, are subject to GST. ● You only want us to rule on the GST status of food consumed away from the premises. ● The majority of meals are consumed on a take- away basis. ● Customers are asked whether meals will be consumed on or away from the premises. ● Details of all food products and beverages were provided.

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 section 38-4

Reasons for decision: Summary: GST is payable on taxable supplies. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. (* Denotes a defined term in the GST Act). In your case, the supplies of your products meet the criteria of paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act. That is, you make supplies of your products for consideration and in the course or furtherance of an enterprise that you carry on. Your supplies are connected with Australia and you are registered for GST. There are no provisions in the GST Act that would make the supplies of your products input taxed. Therefore, it remains to be determined whether the supplies of your products will be GST-free under Division 38 of the GST Act. | Detailed Reasoning - Food Products A: A supply of food is GST-free in accordance with section 38-2 of the GST Act, if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in section 38-3 of the GST Act. The meaning of food in section 38-4 of the GST Act includes food for human consumption (whether or not requiring processing or treatment) and beverages for human consumption. Under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is of a kind specified in Schedule 1 to the GST Act (Schedule 1) or food that is a combination of one or more foods and at least one of the foods is listed in | Detailed Reasoning - Schedule 1.: Of particular importance is item 4 of Schedule 1, which provides that food marketed as a prepared meal, but not including soup, is not GST-free. It is considered that your ready meals fall under the category of prepared meals as they are all prepared and ready for eating. Furthermore a supply of hot food such as some of your prepared meals for consumption away from the premises from which it is supplied is taxable under paragraph 38-3(1) (b) of the GST Act. The word 'hot' is not defined for the purposes of the GST Act; however the Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 provides some guidance: 'Hot food' means food that has been heated above the room temperature or above the generally surrounding air temperature for consumption. From the facts provided, your ready meals are either prepared meals or hot food or both. Accordingly, you are not making a GST-free supply under section 38-2 of the GST Act when it supplying your ready meals You are registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, you are making a taxable supply under section 9-5 of the GST Act when it supplies its ready meals. Your Food Products A will be taxable when supplied with Beverages Y and a mixed supply when supplied with Beverages X. | Detailed Reasoning - Beverages Y: According to paragraph 38-4(1) (c) of the GST Act, the definition of food includes beverages for human consumption. The category of relevance to this case is 'fruit and vegetable juices'. Non-alcoholic and non-carbonated beverages are specifically included as being GST-free under item 12 of Schedule 2, if they consist of at least 90% by volume of juices of fruits or vegetables. Based on the information provided, your juices consist less than 90% by volume of juices of fruits or vegetables and they are non-alcoholic and non-carbonated beverages. Consequently, they do not fall within the scope of item 12 of Schedule 2 to the GST Act. Accordingly, you are not making a GST-free supply under section 38-2 of the GST Act when it supplying beverages Y. You are registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision in Division 38 of the GST Act, nor input taxed under Division 40 of the GST Act. Therefore, you are making a taxable supply under section 9-5 of the GST Act when supplying Beverages Y. | Detailed Reasoning - Food Products B: As discussed above, a supply of food is GST-free in accordance with section 38-2 of the GST Act, if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in 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). The foods other than ready meals are food for human consumption in accordance with paragraph 38-4(1)(a) of the GST Act. As stated earlier under paragraph 38-3(1)(c) of the GST Act, a supply of food is not GST-free if it is of a kind specified in Schedule 1, or food that is a combination of one or more foods and at least one of the foods is listed in Schedule 1. The particular item of relevance is item 4 of Schedule 1 (Item 4), which lists 'food marketed as a prepared meal, but not including soup'. Based on the facts provided, your ‘foods other than ready meals’ are not marketed as prepared meals and as such they are not covered by item 4 of Schedule 1. Furthermore, they are not covered by any other item in Schedule 1. Accordingly, you are making a GST-free supply under section 38-2 of the GST Act when you supply the foods other than ready meals unless they are supplied for consumption on the premises. The Food Products B will be GST-free when supplied with Beverages X. When supplied with beverages Y, it will be a mixed supply. | Detailed Reasoning - Beverages X: According to paragraph 38-4(1)(c) of the GST Act, the definition of food includes beverages for human consumption. The category of relevance to this case is 'fruit and vegetable juices'. Non-alcoholic and non-carbonated beverages are specifically included as being GST-free under item 12 of Schedule 2 (item 12), if they consist of at least 90% by volume of juices of fruits or vegetables. Based on the information provided, your beverages X consist of at least 90% by volume of juices of fruits or vegetables and they are non-alcoholic and non-carbonated beverages. Consequently, they fall within the scope of Item 12. Therefore the juices will be GST-free unless they are supplied for consumption on the premises. | Detailed Reasoning - MIXED SUPPLIES:: Section 9-40 of the GST Act provides that the entity is liable for GST on the taxable supplies that it makes. Generally, an entity's GST liability is calculated as 1/11th of the consideration for the supply. Where a GST-free item is supplied with a taxable item such as hot soup with plain bread or as part of a meal deal, and they are not supplied for consumption on the premises, the supply is partly taxable and partly GST-free (mixed supply). Goods and Services Tax Ruling GSTR 2001/8 provides guidance on mixed supplies by describing the characteristics of supplies that contain taxable and non-taxable parts. Paragraphs 16 of GSTR 2001/8 state: A mixed supply is a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised... Where the supply is a mixed supply, the GST liability is only calculated on the taxable portion as determined in subsection 9-80(2) of the GST Act.

This notice must not be taken to imply anything about: | ● the binding nature of the private advice issued to the applicant | ● the correctness of other edited versions. | Edited versions cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases.