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

Ruling: Q1: What is the GST status of fruit salad, vegetable salad and bottled still water when sold for consumption to both dine-in and away from the premises? | A1: You seek advice on the goods and services tax (GST) status of takeaway fruit salad, vegetable salad and bottled water for consumption on the premises and away from the premises.

Relevant facts and circumstances: You seek advice on the goods and services tax (GST) status of takeaway fruit salad, vegetable salad and bottled water for consumption on the premises and away from the premises.

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: Section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply of food is GST-free. However, section 38-3 of the Act states: 1) A supply is not GST-free under section 38-2 if it is a supply of: (a) food for consumption on the premises from which it is supplied; or (b) hot food for consumption away from those premises; or...'. Therefore, a supply of food that would otherwise be GST-free, such as bottled water or fruit and vegetable salad, becomes a taxable supply by virtue of paragraph 38-3(1)(a) of the GST Act if it is for consumption on the premises from which it is supplied. Section 38-5 of the GST Act defines 'premises': Premises, in relation to a supply of food, includes: (a) the place where the supply takes place; or (b) the grounds surrounding a cafe or public house, or other outlet for the supply; or…' Paragraph 5 of Goods & Services Tax Determination GSTD 2000/4 explains: …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" are the kiosk and not the caravan park, camping ground or hotel/resort complex;… When considering the possible application of paragraph 38-3(1)(a) of the GST Act to supplies of food made from the store, the store itself and any associated surrounding area connected with the outlet are the relevant premises, as indicated in paragraph 5 of GSTD 2000/4. You have advised that there are no tables or chairs in the store itself, although there are tables and chairs located near the store. Considering their proximity to the store, it is reasonable to conclude that the tables and chairs are in an associated surrounding area connected with the store. By virtue of paragraph 38-5(b) of the GST Act, the area where the tables and chairs are located will form part of the premises of the store. Goods & Services Tax Determination GSTD 2000/5 provides guidance on how to determine whether a supply of food is for consumption on the premises from which it is supplied. As you advise that the store personnel are not aware of where the customer will consume the food, paragraph 4 of GSTD 2000/5 is relevant: 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).' The following examples in GSTD 2000/4 are relevant, as the situation of a snack bar in a food court is considered to be comparable with the situation of a store in a resort complex: | Detailed Reasoning - Example 2: 9. Heather has a snack bar in a food court. All of the water that she sells to customers, whether they drink it in the food court or take it away, is in its sealed bottled form. It is not Heather's practice to ask customers who purchase food or drink if they wish to consume it in the food court or take it away. 10. The bottled water is not served at a table and it is not served in circumstances indicating that consumption will take place on the premises (for example, accompanying a meal on a returnable tray). We will accept that the water is not supplied for consumption on the premises. | Detailed Reasoning - Example 3: 11. The facts are the same as in example 2 except that Heather asks her customers if they wish to consume their food or drink in the food court or take it away – as she uses different packaging for dine-in and takeaway supplies. 12. For those customers who indicate that they will dine in the food court, supplies of food and drink, including whole fruit and bottled water which would otherwise be GST-free, are for consumption on the premises and will be taxable. For those customers who indicate that they will take the food or drink away, supplies that are otherwise GST-free are not for consumption on the premises and will remain GST-free. On the facts that you provided, the situation in example 2 in GSTD 2000/4 is comparable with the manner in which supplies of food are made from your store in the complex. Accordingly, a GST-free supply such as fruit salad, vegetable salad and bottled water remains GST-free if it is not supplied for consumption on the premises . Provided that: ● the operations of the store do not identify whether a customer intends to consume the food on the premises; and ● the food is not supplied in a form that would indicate that it is to be consumed on the premises; and ● the food is not served at a table. The supply of the fruit salad, vegetable salad and bottled water sold in takeaway containers will be GST-free. Food supplied for consumption on the premises will be 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.