Private ruling: GST classification of food item

Ruling: You are registered for goods and services tax (GST). | You have recently commenced marketing a food item (Product). | The Product is best described as a frozen dairy dessert that is ready to eat once it is thawed from its frozen state. It is not baked. | According to the package labelling, the Product consists of cream (43%), biscuit crumb (15%), chocolate/cocoa, water and various other ingredients. It recommends the item be stored in a freezer. | The frozen Product is prepared for consumption by cutting it into the number of desired pieces and is served cold after allowing it to thaw for 30 minutes. Unused frozen portions must be returned immediately to a freezer. | It is not supplied by you for consumption on your premises nor is it suitable for use as hot food for consumption away from the premises of purchase. | Detailed reasoning | 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. | Food is defined in section 38-4 of the GST Act to include food for human consumption (whether or not requiring processing or treatment). | The Product being a ready to eat dessert, satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act as it is food for human consumption. | Section 38-3 of the GST Act provides that food will not be GST-free under section 38-2 of the GST Act if certain conditions are met. Those that may be of relevance to this case are paragraphs 38-3(1)(a), (b) and (c) of the GST Act. The first two paragraphs provide that the supply of food will not be GST-free if: | · it is for consumption on the premises for which it is supplied | · it is hot food for consumption away from those premises | Given the Product is not supplied for consumption on your premises and being a frozen dessert it is not hot food, then it is not excluded from being GST-free by virtue of either paragraphs 38-3(1)(a) or 38-3(1)(b) of the GST Act. | 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), or food that is a combination of one or more foods at least one of which is food of such a kind. | The Product is not listed in Schedule 1. However, an item that is of particular relevance to the supply of the food product is Item 20 in Schedule 1 (Item 20). | Item 20 lists various bakery products such as 'cakes, slices, cheesecakes, pancakes, waffles, crepes, muffins and puddings'. Of relevance to the food products are cakes, slices, cheesecakes and puddings. As such, it is necessary to determine whether the food product is a kind of 'cake, slice, cheesecake or pudding'. | As the phrase 'of a kind' is not defined in the GST Act, it is appropriate to examine the ordinary meaning of that term. The Macquarie Dictionary (1997) does not define the entire phrase 'of a kind'. However, it defines the word 'kind' to mean: | 1. A class or group of individuals of the same nature or character, especially a natural group of animals or plants. 2. Nature or character as determining likeness or difference between things: things differing in degree rather than in kind. 3. A person or thing as being of a particular character or class: he is a strange kind of hero. 4. … | Accordingly, something will be 'of a kind' if it is of the same nature or character (possessing the same distinguishing qualities) as the thing or group in question. The terms 'cake, cheesecake and pudding' are not defined in the GST Act and therefore take on their ordinary meaning. | Cakes and slices | The Macquarie Concise Dictionary, 1998, 3 rd edition (the dictionary) defines 'cake' to mean amongst other things 'a sweet baked food in loaf or layer form, made with or without shortening, usually with flour, sugar, eggs, flavouring, usually with baking powder or soda, and a liquid'. | The relevant definition of 'slice' in the dictionary is 'any of several cakes or biscuits cooked or formed as a thin slab and cut into rectangular pieces'. | The Product is not a baked food item nor is it formed as a thin slab which is cut into rectangular pieces. It is different and has features that distinguish it from the above definitions. Consequently the Product is not considered to be a kind of cake or slice for the purposes of Item 20. | Cheesecakes | 'Cheesecake' is defined in the dictionary to mean 'a kind of cake or open pie filled with a custard-like preparation containing cheese'. This definition encompasses products that are cold set as well as those that are baked. | As the ingredients of the Product do not contain cheese or cheesecake flavouring then it is not considered to be a kind of a cheesecake for the purposes of Item 20. | Puddings | The dictionary defines 'pudding' to mean 'a sweet or savoury dish made in many forms and of various ingredients, as flour (or rice, tapioca, or the like), milk, and eggs, with fruit, meat, or other ingredients'. Issue 13 in the Food Industry Partnership Issues Register on the Tax Office website further adds to this definition and states that a pudding is: | 'a cooked food that is a sweet or savoury dish made in many forms and of various ingredients, as flour (or rice, tapioca, or the like), milk and for eggs, with or without fruit, meat or other ingredients and is a cooked dish consisting of various sweet or savoury ingredients, especially as enclosed within a flour-based crust or mixed with flour, for eggs, etc., and boiled or steamed; a baked batter mixture'. | Issue 13 includes examples of products that would be considered a 'pudding' and subject to GST. These include baked rice pudding, self-saucing puddings and steamed puddings. | The Product has different features that distinguish it from the above definitions and as a consequence it is not a kind of pudding for the purposes of Item 20. | Biscuit goods | In accordance with the fact sheet, Detailed food list , biscuit crumbs are taxable. | Although the Product does not contain whole biscuits, it does contain biscuit crumbs, which we consider to be food of the same kind as biscuits, as biscuit crumbs are biscuits in crushed form. | As biscuit crumbs only constitute 15% of the Product, it does not consist principally of, biscuits and as such it is not a biscuit good for the purposes of the GST Act. | Combinations of foods | The Product contains multiple ingredients, including biscuit crumbs which are food of a kind specified in Schedule 1. However, according to the Australian Taxation Office view, we do not consider that the Product is a combination of one or more foods, for the purposes of paragraph 38-3(1)(c) of the GST Act. This is because the individual ingredients lose their separate identities when they are combined together to form the dessert. | Summary | Given the Product meets the definition of food and none of the exclusions of section 38-3 of the GST Act apply, then we find that the supply of your product is GST-free under section 38-2 of the GST Act.




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