Private ruling: GST and food
Published: April 2013

Ruling: Q1: Is your supply of the food products as detailed in the facts GST-free? | A1: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You supply products to your customers that include salads, meats, nuts and a special type of Asian product. None of the salads, meats or Asian product are labelled and sold as prepared meals and all are stored and sold refrigerated. The Asian product is labelled and sold as a soup. The nuts are put through various manufacturing processes to put them in a state suitable for human consumption. These processes may include drying by applying heat. None of the nuts are subject to processes that alter their raw character (that is, they are not roasted, smoked, salted, spiced or similar). The nuts are packaged and labelled as such and are not labelled as snacks or otherwise. None of your products are consumed on your premises. None of your products are supplied hot.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 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 it satisfies the definition of food in section 38-4 of the GST Act and it is not excluded 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 (paragraph 38-4(1)(a)) and ingredients for food for human consumption (paragraph 38-4(1)(d)). In your case, you sell the products to your customers as food for human consumption or as ingredients for food for human consumption. Consequently, the products satisfy the definition of food given in section 38-4 of the GST Act. As none of your products are consumed on your premises or supplied hot, they do not fall within any of the exclusions given 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). Schedule 1 includes the following food items that may be of relevance when considering the GST treatment of your supply of the products: · food marketed as a prepared meal, but not including soup (Item 4), and · savoury snacks including seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way (Item 16). Note that there are no other items in Schedule 1 that need to be considered in relation to the food products. Food marketed as prepared meals The ATO view on prepared meals is provided by Issue 5 of the Food Issues Register (Issue 5 - available from the Australian Taxation Office (ATO) website). 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 also explains that for food to be considered as a prepared meal, 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. Classification of your food products in relation to prepared meals Meats The meats all require refrigeration for their storage and are food products that could be purchased from a take-away. However, it is generally the case that meats purchased from a take-away are purchased as hot food. A customer buying a meat product from a take-away does not normally want to have to heat the product prior to its consumption. Hence, when meats are sold cold, they no longer compete directly with a take-away but become a product that is more likely to be purchased from a supermarket or similar retail outlet. Also, Issue 5 does provide some examples of prepared meals (that may or may not be marketed as such). These types of meals are treated as prepared meals as they incorporate a combination of different types of foods that would be found in a complete or balanced meal, for example meat or fish with a serving of vegetables or rice. In this case, your meat products consist solely of a meat component and therefore do not provide the balance or combination of different types of foods for them to be considered as prepared meals. Given these points, the meats do not fall within Item 4 of Schedule 1. Asian product The Asian product has the appearance of a soup and is marketed and labelled as such. It is not marketed or labelled as a prepared meal. Hence, it can be treated as a soup for GST purposes and consequently, given the exemption applied to soups in Item 4, it is not food of a kind specified at Item 4 of Schedule 1. Salads None of the salads are specifically listed in Issue 5 and they are not marketed or labelled as prepared or complete meals. Further to this, the GST food guide (also available from the ATO website) provides that salads, including pasta, rice, coleslaw, meat, seafood and green salad, sold from salad bars at supermarkets in either the delicatessen section or from a self-serve bar, are GST-free only if they are not marketed as prepared meals. The principle here is that salads not consumed on the premises from where they are purchased and not marketed as a prepared meal will be GST-free. Given these points, the salads do not fall within Item 4 of Schedule 1. Classification of your food products in relation to savoury snacks Nuts The nuts are put through various manufacturing processes to put them in a state suitable for human consumption. These processes may include drying by applying heat. In this case, we accept that the manufacturing processes as described are those generally used in the industry to bring the nuts to a point of being suitable for sale as food for human consumption. We also accept that the nuts have not been altered from their raw state as a result of the manufacturing processes. The drying process is distinct from the process that occurs in the case of roasting where the nut is cooked right through at a much higher temperature. Also, none of the nuts have been smoked, salted, spiced or similar. The nuts are packaged and labelled as such and are not labelled as snacks or otherwise. Consequently, we consider that what is being sold are raw nuts that could be eaten or just as easily be used as ingredients in other foods. As such, the nuts are not food of a kind specified at Item 16 of Schedule 1. This reasoning is confirmed in the Detailed food list (also available on our website). This publication provides details of the GST status of major food and beverage product lines and has the status of a public ruling for GST purposes. In it, raw nuts (shelled or unshelled) are classified as GST-free as they are food for human consumption that are not of a kind specified in Schedule 1. As none of your products are captured by Schedule 1, their supply would be GST-free under section 38-2 of the GST Act as food.

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