Private ruling: GST and food products
Published: July 2012

Ruling: Q1: Will the sale of your food products be subject to goods and services tax (GST)/ | A1: No.

Relevant facts and circumstances: You are registered for GST. You are to sell food products. The products will be sold cold and will be sold separately in plain plastic tubs. None of the products will be marketed or sold as prepared meals. The products have been partially cooked to various stages. Any further cooking will be completed by the customer however no instructions are issued to the customer on how to complete the cooking process. One of your products (Product Y) will be fried before being sold.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 38-2 | Section 38-3 | Section 38-4 | Taxation Administration Act 1953

Reasons for decision: Summary: A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded 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 and ingredients for food for human consumption. In your case, you are to sell food products. The products will be sold cold and will be sold separately in plain plastic tubs. None of the products will be sold or marketed as prepared meals. The products satisfy the definition of food because they will be sold as food for human consumption. The products do not fall within any of the exclusions in section 38-3 of the GST Act except some may possibly be captured by paragraph 38-3(1)(c). Paragraph 38-3(1)(c) of the GST Act provides that 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). | Detailed Reasoning - Detailed food List: Before discussing the types of food listed in Schedule 1, it is worth referring to the Detailed food list (available from the ATO website www.ato.gov.au), a public ruling for the purposes of the Taxation Administration Act 1953 . The Detailed food list shows the supply of a particular product as being GST-free provided it is not served hot. We consider the addition of a certain condiment to this product does not substantially change the character of the product, that is, the product with the addition of the condiment can be treated for GST purposes as the same product. Consequently, the supply of your product will be GST-free. The detailed food list also has the supply of another particular product as being GST-free. Your product would be very similar in character to this type of product. It is also not relevant that your product has been cooked or partially cooked. Consequently, the supply of your product will be GST-free. | Detailed Reasoning - Schedule 1: It is now necessary to consider Schedule 1 for the other remaining products. In the case of one of your products it is only necessary to consider Item 4 of Schedule1, this item covering prepared meals. Another one of your products is not specifically included in Schedule 1. Nevertheless, these products may be subject to GST by virtue of paragraph 38-3(1)(c) of the GST Act which refers to food of a kind to those foods listed in Schedule 1. | Detailed Reasoning - Prepared meals: The ATO view on prepared meals is provided by Issue 5 of the Food Issues Register (Issue 5) (also available from the ATO website). Issue 5 provides that the term prepared meal is intended to cover a range of food products that: · directly compete against take-aways and restaurants · require refrigeration or freezing for storage (clause 3 of Schedule 1); and · are marketed as a prepared meal. Issue 5 further provides some examples of prepared meals and includes: · curry and rice dishes, mornays and similar dishes sold cold by a take-away or supermarket that only need reheating to be ready for consumption; · fresh or frozen lasagne; · sushi; · cooked pasta dishes sold complete with sauce; · frozen TV dinners; and · fresh or frozen complete meals (for example, single serves of a roast dinner including vegetables and low fat dietary meals). In your case, your product will not be marketed by you as a prepared meal. The product also does not have the necessary mix of ingredients, as illustrated by the products listed above, to be considered as a prepared meal. Given this, your product will be GST-free under section 38-2 of the GST Act when sold. | Detailed Reasoning - Product Y: Product Y is a savoury product and has some characteristics to a food, the supply of which is taxable. Product Y cannot by itself be considered as a prepared meal therefore, it is only necessary to consider if Product Y is a food of a kind similar to those foods listed in Items 22 and 25 of Schedule 1, these items covering savoury products such as pasties and pastizzi (the other pastry products listed in Schedule 1 are sweet pastries and therefore not relevant). Issue 30 of the Food Issues Register (Issue 30) provides the ATO view on pastry products. Issue 30 illustrates that foods can be considered food of a kind if the food is a pastry product that is cooked by baking (pasties are baked, pastizzi is baked etc). Issue 30 also provides that products such as dim sims and curry puffs are cooked by frying and hence would not be captured by Schedule 1. Issue 30 therefore concludes that a pasty product that is fried is substantially different to those products listed in Items 22 and 25. In the case of Product Y, it will be fried prior to being sold. Given this, Product Y is not captured by Schedule 1 as it is a product that is generally cooked by frying. Therefore when sold, Product Y will be a GST-free supply under section 38-2 of the GST Act.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.