Private ruling: GST and food
Published: May 2012

Ruling: Q1: Will your supply of a food product be GST-free under section 38-2 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: 

Relevant facts and circumstances: You are registered for goods and services tax (GST). You are to sell a food product (Product). The Product consists of only one particular type of food that has been partially cooked then chilled, sliced and packaged. The Product will not be sold as food for a catered event. It will be sold chilled with the purchaser having to finish the cooking process. The purchaser can add their own food products to make a plated meal or place the Product in a roll or similar. It is your intention to sell the product in bulk to various organisations. You will not market the product as a prepared meal.

Relevant legislative provisions: All references are to the GST Act: 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 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 will be sold to various organisations 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 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 www.ato.gov.au ). 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 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 listed 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 or rice. In your case, the Product consists solely of one particular type of food and therefore cannot be considered as being a complete meal. Also, although the Product will be sold chilled and sliced, with the purchaser having to finish the cooking process, it will not be marketed by you as a prepared meal or sold as food for a catered event. Given these points, the Product does not fall within Item 4 of Schedule 1. As a result, the Product will 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 will be GST-free.

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