Private ruling: GST and food
Published: July 2013

Ruling: Q1: Is your supply of the food product GST-free? | A1: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You sell a food product (Product). The Product is sold principally to a particular type of industry. The Product comprises various cooked components. The components are packaged and sealed into storage bags. Each component is not packaged separately within the storage bag. The storage bag has a label showing the minimum information required by a State Government's Food Standards Authority (product name, company address, nutritional information, ingredients, preparation instructions and production batch code). The storage bags are then packaged into a box. Labelling on the box shows the type of Product, what meal it is required for and at what time. The contents of each storage bag would serve several people. You consider that the Product is the basis upon which a complete meal could be made (i.e. further food ingredients need to be added to the Product to make a complete meal). The Product is made specifically to meet to your customers' nutritional requirements. You have provided correspondence from one of your customers stating that the Product has been specifically manufactured to meet their nutritional requirements and that they add other food ingredients to form a complete main meal. The Product is sold refrigerated.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 : Section 38-2 | Section 38-3 | Section 38-4.

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 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. The definition of food in section 38-4 of the GST Act includes food for human consumption, whether or not requiring processing or treatment. Your Product is sold to your customers as food for human consumption and consequently, can be treated as food for human consumption. Your Product does not fall within any of the exclusions in section 38-3 of the GST Act except possibly 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) or is a food that is a combination of one or more foods at least one of which is food of such a kind. Schedule 1 includes the only following food item that may be of relevance when considering the GST treatment of your supply of the Product: food marketed as a prepared meal (Item 4 of Schedule 1). Prepared meals The ATO view on prepared meals is provided by Issue 5 of the Food Issues Register (Issue 5 - 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). Issue 5 further provides that that for food to be regarded as a prepared meal in accordance with Item 4 of Schedule 1, the food needs to be supplied assembled and dressed (if applicable). In addition, if the food is cooked or partly cooked and is to be served hot, it should only need heating, which may include completion of the cooking process, to be ready for consumption. Heating will be interpreted to mean warmed in the microwave oven, convection oven, frying pan, wok or saucepan. The prepared meals identified in Issue 5 can be considered as being complete meals as they incorporate a combination of different types of foods generally found in most meals, for example meat or fish with a serving of vegetables, pasta or rice. In your case, the Product comprises cooked components that would be found in a complete meal as identified in Issue 5. The Product is also sold refrigerated. However, the Product is not marketed as a prepared meal. They are packaged and sealed in storage bags with contents that are to be served to several people. The Product is also made specifically to meet the nutritional requirements of your specific clients. The storage bags do not compete with take-aways or restaurant meals. The Product would require dressing and further items such as vegetables and rice to form a prepared meal. Given these points, the Product does not fall within Item 4 of Schedule 1. As a result, the Product is not be exempted from being a food for human consumption under 38-3 of the GST Act and consequently, the Product is a food as defined by subsection 38-4(1) of the GST Act. Hence the sale of the Product would be GST-free.