Private ruling: GST and food classification
Published: May 2015

Ruling: Q1: Are your supplies of bread product GST-free? | A1: Yes.

Relevant facts and circumstances: • You are registered for goods and services tax (GST). • You are proposing to launch a new bread product. • The bread product contains no sweet filling or coating. • The manufacturing process for the product involves combining all the required ingredients together and mixing into dough. • The dough is cut and individual pieces are transferred to oiled trays and allowed to prove. Egg wash is then applied prior to cooking. • The dough is then baked until it is golden. • The bread products are not for consumption on the premises.

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 Schedule 1

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 does not come within any of the exclusions listed in 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 bread product satisfies the definition of food in section 38-4 of the GST Act because they are food for human consumption. However, 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). The bread products are not specifically listed in Schedule 1. However, an item that is of particular relevance to the supply of your bread products is Item 27 in Schedule 1 (Item 27). Item 27 relates to 'Bakery products' and provides that bread with a sweet filling or coating is not GST-free. You have advised that your bread products consist principally of flour, milk powder and water. These items, together with other ingredients, are mixed into dough and are considered to be ingredients for the bread products. They are not regarded as a sweet filling. Furthermore, the glazing of the cut dough pieces prior to the cooking is not considered to be sweet coating for the purposes of Item 27. Accordingly, as the bread product does not contain a sweet filling or coating, it is therefore not food of a kind specified in Item 27 in Schedule 1 to the GST Act. The product is also not food of a kind specified in any of the other items in Schedule 1. The supply of the bread products is therefore GST-free under section 38-2 of the GST Act.