Private ruling: Goods and services tax (GST) and sale of frozen fruit product at outdoor markets
Date of advice: 4 August 2016
Published: September 2016

Ruling: Q1: Are your sales of pureed frozen whole fruit, and other fruit products GST-free where you sell them at an outdoor market that forms part of a venue associated with leisure, sport or entertainment, which has clear boundaries or limits? | A1: Your sales of the product will not be GST-free under such circumstances, unless the leisure, sport of entertainment venue is a public thoroughfare. | Q2: Are your sales of pureed frozen whole fruit, and other fruit products GST-free where you sell them at an outdoor market that does not form part of a venue associated with leisure, sport or entertainment, which has clear boundaries or limits? | A2: Yes.

Relevant facts and circumstances: You are registered for GST. You sell frozen fruit that is pureed and other fruit at outdoor markets in the region. You named the products (name). You purchase whole fruit from the supermarket and other markets. Then you freeze the fruit until market day. The whole fruit is then cut into manageable portions and put through a machine which purees the fruit. The fruit purees do not contain any additives. The fruit puree is 100% fruit. The purees have the consistency of frozen yogurt. Customers have the option of adding various toppings which you process and blend at the time of the order. You serve the products in a bowl, without a covering on top. You also provide a spoon. Your website states prominently at the top of one page '100% (something) fruit and (another reference to fruit)'. Your website also refers to the products as sorbets. You put up a sign up at your stall saying 'frozen fresh fruit'. You do not market the products as beverages or ingredients for beverages. You sell the products at stalls at many outdoor market venues, including venues in various localities. The area your stall occupies may be part of a larger enclosed venue associated with sport, for example, one venue is (locality) sports grounds. The grounds include soccer fields. The oval you operate from is not well maintained and it does not have much grass on it. No sporting event is conducted on the oval that the market operates on, while the market is operating. A number of the venues you operate from are streets that are closed off for the duration of the market. Another venue is a cark park, which is adjacent to a tourist attraction at (locality). You do not provide seating for customers to consume your products. There is no seating for customers in the whole market area. Customers eat your products as they walk through the markets browsing products of stallholders. You pay a fee for the right to set up a stall at a market. Depending on the market, customers may or may not pay an entrance fee.

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 | A New Tax System (Goods and Services Tax) Act 1999 section 38-5

Reasons for decision: Summary: In the case of open air markets, you supply food for consumption on the premises from which you supply it, for GST purposes, only where all of the following circumstances exist: • you supply it at a venue associated with leisure, sport or entertainment, which has clear boundaries or limits; and • that venue is not a public thoroughfare. Under such circumstances, paragraph 38-3(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) excludes your sale of the product from being GST-free under the food exemption provision. | Detailed Reasoning - Detailed reasoning: A supply of food is GST-free under section 38-2 of the GST Act provided that the supply does not come within any of the exclusions listed in subsection 38-3(1) of the GST Act. Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a)). The products in question are food for human consumption. Therefore, they satisfy the meaning of food in section 38-4. The relevant exclusion provisions in subsection 38-3(1) are paragraph 38-3(1)(a) and 38-3(1)(c). Food of a kind specified in Schedule 1 to the GST Act. Paragraph 38-3(1)(c) of the GST Act provides that food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind, is not GST-free.. The relevant item in Schedule 1 for frozen fruits is item 29. Item 29 lists frozen confectionery, frozen yoghurt and frozen fruit products (but not frozen whole fruit). The food products in item 29 are intended for consumption as frozen or soft served foods, such as ice cream. The relevant part of item 29 is frozen fruit products. The relevant food items under the Detailed Food List, which has public ruling status, are as follows: | Detailed Reasoning - Notes: frozen whole fruit (including puree) GST-free Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. fruit puree GST-free Food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. Sorbet Taxable Schedule 1, item 29 of the GST Act applies. For GST purposes, whole fruit does not have to be a single uncut piece of fruit but can be fruit pieces or pureed fruit provided it is purely fruit without additives such as fruit syrup, sugar, water or similar. Your products are, or include, whole fruit in puree form. The fruit puree does not contain any additives. Therefore, your products are not taxable under the category of frozen fruit products in item 29. Sorbet is not frozen whole fruit because it contains not only fruit but also additives. The frozen fruit part of your products is not sorbet because it contains fruit only. Your products are not covered by any of the items listed in Schedule 1 and they are not a combination of foods at least one of which is food of such as kind. Therefore, the exclusion at paragraph 38-3(1)(c) of the GST Act does not apply. Food supplied for consumption on the premises from which it is supplied Paragraph 38-3(1)(a) of the GST Act provides that food supplied for consumption on the premises from which it is supplied is not GST-free. Goods and Services Tax Determination GSTD 2000/4 Goods and services tax: what does the word 'premises' mean in the expression, 'a supply of food for consumption on the premises from which it is supplied'? GSTD 2000/4 states at paragraphs 1 to 4: 1. The ordinary meaning of the word 'premises' is widened by the definition in section 38-5 of the A New Tax System (Goods and Services Tax) Act 1999 . Premises falling within the section 38-5 definition include: · the place where the supply takes place - for example, supermarkets, restaurants, cafes, snack bars, hotels, motels, bed and breakfasts, clubs, reception lounges, aircraft, boats, trains, venues for catered functions, or food courts where tables are supplied for customers of food retailers; · the grounds surrounding restaurants, cafes, snack bars, hotels, clubs, reception lounges and venues for catered functions; and · any venues, associated with leisure, sport or entertainment, with clear boundaries or limits. 2. However, premises do not include public thoroughfares unless an area has been designated for use in connection with the food supply outlet. 3. The following venues associated with leisure, sport or entertainment fit within the definition of 'premises' in the context of 'a supply of food for consumption on the premises from which it is supplied': · football grounds · exhibition halls · other sports grounds · theme parks · golf courses · showgrounds · gyms · aquariums · ice-skating rinks · galleries · motor racing circuits · gardens racecourses · museums · swimming pools · zoos · tennis centres · cinemas · ten pin bowling alleys · concert halls · air-show venues · entertainment centres · amusement parks/arcades · theatres. 4. The above venues may be used for other purposes - for example, business or trade conventions. However, the manner in which a venue is used will not affect its status as 'premises'. If used for other purposes, the above venues are still considered to be 'premises'. GSTD 2000/4 at paragraph 5 discusses the situation where a food supplier has their own food outlet from which they supply food and this outlet sits within a larger site. It states: 5. With some venues it is important to determine what are the relevant premises. Some suppliers' premises sit within larger general purpose sites. As long as the larger sites are not venues associated with leisure, sport or entertainment, it is only the suppliers' premises that are relevant. At the following venues, the relevant premises are limited to the food supply outlet (together with any associated surrounding areas connected with the outlet): · kiosks or similar stores located within caravan parks, camping grounds, or hotel/resort complexes - the 'premises' is the kiosk and not the caravan park, camping ground or hotel/resort complex; · school tuckshops - the 'premises' is the tuckshop and not the school; · canteens and dining areas in hospitals, offices, factories, university halls of residence or colleges - the 'premises' is the canteen or dining area and not the hospital, office, factory, university hall of residence or college; · cafes in shopping centres, universities, airports, bus depots or railway stations - the 'premises' is the cafe and not the shopping centre, university, airport, bus depot or railway station. GSTD 2000/4 at paragraph 11 gives an example of a food outlet that is located within a leisure/sport/entertainment complex. It also gives an example of a public thoroughfare. It states: 11. Sue operates a kiosk which is located within a swimming pool complex. The swimming pool complex is situated within a public park. Although the kiosk sells mainly to pool customers, there is also a window which faces out onto the park. It is the swimming pool complex that is the relevant premises. Food supplied and eaten inside the pool complex is supplied for consumption on the premises. The public park is a public thoroughfare and does not form part of the premises. Food sold through the window to customers in the park is not supplied for consumption on the premises. Goods and Services Tax Determination GSTD 2000/5 Goods and services tax: when is a supply of food, in terms of paragraph 38-3(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 , 'for consumption on the premises from which it is supplied'? GSTD 2000/5 at paragraph 4 provides guidance on determining whether food is supplied for consumption on the premises from which it is supplied. It states: 4. 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). You do not supply the food for consumption at the place where you supply it - that place being your stall. Additionally, there are no associated surrounding areas connected with this outlet and no area is designated for use in connection with this outlet. Therefore, you supply food for consumption on the premises from which you supply it, for GST purposes, only where all of the following circumstances are exist: • your stall is part of a larger site, which is a venue associated with leisure, sport or entertainment, which has clear boundaries or limits; and • you supply the products for consumption at that venue; and • that venue is not a public thoroughfare. You serve your products in a bowl with no lid, and you provide a spoon, which indicates that they are going to be consumed at the market. Additionally, you advised that customers eat your products while they walk through the market browsing products at the stalls. Hence, you are serving the food in circumstances indicating that consumption will take place at the market venue. Therefore, where: • you supply the products at a venue associated with leisure, sport or entertainment, which has clear boundaries or limits (for example, (locality) sports ground); and • the venue is not a public thoroughfare, you are supplying the products for consumption on the premises from which you supply them, for the purposes of section 38-5 of the GST Act. We do not consider that a sports ground is a public thoroughfare. (An example where you are supplying the products for consumption on the premises from which you supply them, for the purposes of section 38-5 of the GST Act, is where you operate from (locality) market. In accordance with paragraph 4 of GSTD 2000/4, the fact that no sporting event is held on the relevant oval, while a market is held on the oval does not affect the status of the overall sporting venue as premises under section 38-5 of the GST Act.) Hence, under such circumstances, your supplies of the products at such venues are excluded from being GST-free under the food exemption provision by paragraph 38-3(1)(a) of the GST Act. There are no other provisions of the GST Act under which your sales of the products are GST-free under such circumstances. However, where the leisure, sport or entertainment venue is a public thoroughfare, you are not supplying the product for consumption on the premises from which you supply it. Under such circumstances, your supply of the product is GST-free. The venues listed in paragraph 3 of GSTD 2000/4 (see above) are not considered to be public thoroughfares. | Detailed Reasoning - Question 2: Where you supply the products at a market that is not located at a leisure, sport or entertainment venue, which has clear boundaries, you are making GST-free supplies of the products at the market because under such circumstances: • you are supplying food for human consumption • the products are not covered by Schedule 1 and are not a combination of foods at least one of which is food of such a kind • you do not supply the food for consumption on the premises from which you supply them, for the purposes of the GST Act; and • none of the other exclusions in subsection 38-3(1) of the GST Act apply. An example of a type of venue at which your supply of the products is GST-free is a street that has been closed off while a market is held.