Private ruling: GST and food
Published: August 2012

Ruling: Q1: Will your supply of your food product (Food Product) be GST-free? | A1: Yes.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You are to commence selling to retail outlets the Food Product. The retail outlets will then sell the Food Product to their customers. The Food Product will be sold cold and does not require refrigeration. It will come in different flavours. It will be packaged and contains an ingredient that if sold separately would be taxable (Ingredient). The Food Product also comes with a serviette. You received a private ruling several years ago in relation to this Food Product in which it was determined you were making a mixed supply (the Ingredient being a taxable component of the total supply).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act) Section 38-2 | Section 38-3 | Section 38-4 | Section 38-6.

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)(b)). In your case, you are to sell the Food Product to retail outlets. The Food Product will also be sold cold and does not require refrigeration. The Food Product satisfies the definition of food because it will be sold as ingredients to make food that is fit for human consumption. The Food Product does not fall within any of the exclusions in section 38-3 of the GST Act except it may possibly be captured by 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). | Detailed Reasoning - Detailed food List: Before discussing the types of food listed in Schedule 1, it is worth referring to the detailed food list (available from the ATO website www.ato.gov.au), a public ruling for the purposes of the Taxation Administration Act 1953 . The detailed food list shows the supply of a product similar to your Food Product as being GST-free as ingredients for food. Looking at this product that is sold in large food retail outlets and online, it is clear that such products allow the customer to make food for human consumption without the need to add ingredients (or very few ingredients). Comparing your Food Product with these items, we consider that your Food Product can be treated in the same way for GST purposes as the product listed in the detailed food list. Consequently, your supply of the Food Product to retail outlets will be GST-free under section 38-2 of the GST Act. Note that the previous ruling issued to you is now incorrect given the changes to the ATO view on these types of products. Also note that the packaging would also be GST-free under section 38-6 of the GST Act. The serviette is also GST-free as it can be considered as being incidental to the main GST-free supply that is, it can be considered as being part of the main supply and not separate to it.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.