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

Ruling: Q1: Is the sale of your prepared salad products GST-free? | A1: Yes, the sale of your prepared salad products is GST-free

Relevant facts and circumstances: ● You are registered for goods and services tax (GST). ● Your salads are prepared by your staff each day. ● The salads are sold in plastic containers (takeaway form) which are stored in the store's refrigerator. ● You provide tables within your store so that food may be consumed on the premises. ● You do not identify the sale of salads that are consumed on the premises as opposed to those that are taken away. ● You are not presently marketing the salad through other means.

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: 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 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) (paragraph 38-4(1)(a) of the GST Act). The salads are food for human consumption. Therefore, your prepared salads fall within the meaning of food in section 38-4 of the GST Act. However, under paragraph 38-3(1)(a) of the GST Act, a supply of food is not GST-free if it is food for consumption on the premises from which it is supplied. Goods and Services Tax Determination GSTD 2000/5 provides guidance on when a supply of food, in terms of paragraph 38-3(1)(a) of the GST Act, is food for consumption on the premises from which it is supplied. Paragraph 2 of GSTD 2000/5 provides, among other things, that you supply food for consumption on the premises from which it is supplied if the food is to be consumed in grounds surrounding the food supply outlet – for example, at tables on a footpath or in a food court. Your salads are supplied over the counter and customers may consume them either at a table you provide or take them away. Therefore, some of the salads that you supply would be expected to be consumed in your store. You do not identify the salads purchased as takeaway salads from those purchased to be eaten at the tables you provide. Paragraph 4 of GSTD 2000/5 provides that if your business operations do not identify takeaway supplies from dine-in supplies, food will remain GST-free if: ● it is served in its original or takeaway form (for example, an unprocessed apple or unopened bottle of water), and ● it is not served in circumstances indicating that consumption will take place on the premises (for example, the food is not served at a table). Your salads are served in their takeaway form and are not served in circumstances indicating that consumption will take place on the premises, such as, served at a table. Therefore paragraph 38-3(1)(a) of the GST Act is not satisfied. 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Of specific relevance is item 4 of Schedule 1 (Item 4), which provides that food marketed as a prepared meal (but not including soup) is not GST-free. For, food to be regarded as a ‘prepared meal’ under Item 4, the food needs to be assembled, dressed, cooked or partly cooked. Your salads fit the definition of a prepared meal, as your staff prepares the salads for consumption. However, in determining whether food is 'marketed' as a prepared meal the activities of the seller are relevant. Consideration is given to the following: ● the name of the goods ● the price of the goods ● the labelling on any containers for the goods ● literature or instructions packed with the goods ● how the goods are packaged ● how the goods are promoted or advertised, and ● how the goods are distributed. It is considered that your menu board does not actively market the salad as a prepared meal and there are no other factors that give weight to the salads being marketed as a prepared meal. Therefore, your salads are not covered by Item 4 and paragraph 38-3(1)(c) of the GST Act is not satisfied. Furthermore, the salads are not covered by any other item in Schedule 1, nor do they come within any of the other exclusions listed in section 38-3 of the GST Act. Accordingly, you are making a GST-free supply under section 38-2 of the GST Act when you sell your prepared salads. Please be advised that if the marketing of your salads changes from what has been observed the GST status of your salad products may change from being a GST-free supply of food to being subject to GST.

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.