Private ruling: GST and plain bread rolls
Date of advice: 21 March 2024
Published: 6 May 2024

Ruling: Q1: Is the supply of plain bread rolls(Products) a GST-free supply? | A1: Your supply of the Products, whether take-away or served in the stores, is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) because the Products are food for human consumption and satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act, and the Products are not excluded from being GST-free by section 38-3 of the GST Act. | Q2: If the supply of the Products is GST-free, and you have included GST on the price of the Products, can you apply for a refund of excess GST? | A2: You have included GST on the price of the Products and wish to apply for a refund of excess GST. Pursuant to section 142-10 of the GST Act, you cannot receive a refund of excess GST if you: • have passed on excess GST to your customers (incorrectly including GST in the sale price paid by your customers) • have not reimbursed the excess GST to your customers. However, you can still apply for the Commissioner's discretion to allow a refund of your excess GST, even if the listed dot points above apply to you. Please refer to the following link to our website: Refunds of excess GST | Australian Taxation Office (ato.gov.au) for information on how to apply including the approved form that you need to complete and the additional information you need to provide. For more information about the meaning of the terms 'passed on' and 'reimbursed', and how the Administrative Appeals Tribunal decided a particular case on exercising the Commissioner's discretion, see: • Goods and Services Tax Ruling GSTR 2015/1 Goods and services tax: the meaning of the terms 'passed on' and 'reimburse' for the purposes of Division 142 of the A New Tax System (Goods and Services Tax) Act 1999 ( GSTR 2015/1 ) • M3K Services Pty Ltd and Commissioner of Taxation.

Relevant facts and circumstances: You are a bakery, and you are registered for GST. You produce baked Products. Your Products as a whole are marketed as a takeaway snack including the sweet and savoury flavours. You manufacture each Product on site. The Products are baked and then dispensed to customers in takeaway boxes. They are marketed as an in-hand snack that's easy to grab and eat on the go. The Products are plain bread rolls of a particular shape. They are available on your menu as a base product, as you need to bake this product in order to create the base for your marketed sweet and savoury products. They are un-refined product and are usually sold in bulk to other businesses for their refinement, or to children - due to its plain bread-roll nature. You sent samples of the Products. The texture of the Products is like soft bread. You provided the ingredients of the Products and manufacturing process including how the products are packaged. The Products are sold in a carboard box. Customers usually eat them at your bakery or take them home to consume. You also sell them through food delivery service providers. The Products are not served with any cutlery. The Products are bread products served hot out of the oven if they are sold immediately. If they are not sold immediately, they go into a bread warmer at room temperature. This bread warmer acts as a humidifier, and keep the Products from getting hard, because the Products have no preservatives. Hence the Products are kept hot for the purpose of preserving the food. Although there are seatings at some bakeries for customers, the Products are packaged for takeaway. You do not provide plates, cutlery, glassware or anything suitable for dine-in service on site. If a customer chooses to sit and eat the Products at the bakery, they sit and eat the Products from the takeaway boxes given to them in the very same fashion as they would if they took the pretzels away. Your model needs to be suitable for all your bakeries and the majority of them have no seating or very limited seating. There is no table services at the bakeries. Eat-in customers and take away customers, all queue up to order at the same counter. It is not your practice to ask customers whether they want to eat in the bakery at the tables or take the Products away. Customers receive the Products at the counter, and it is up to them to sit at the tables provided or take the Products away. At some bakeries, you also sell coffee and bottled water. Coffee drinks are only in PET bottles, there is no cups or cutlery served with food and drinks. You do not separately identify the Products consumed at the store from those taken away, but you could do so if necessary. You include GST on the price of the Products.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | 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 paragraph 38-3(1)(a) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(b) | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-3(1)(c) | A New Tax System (Goods and Services Tax) Act 1999 section 38-4 | A New Tax System (Goods and Services Tax) Act 1999 paragraph 38-4(1)(a)