Private ruling: GST and food classification
Date of advice: 29 July 2020
Published: September 2020

Ruling: Q1: Is GST payable on the sale of the Products to Australian customers? | A1: No

Relevant facts and circumstances: You are an Australian entity who manufactures a wide variety of food products. You are registered for GST. Each of these Products consists of a small moulded plastic container containing two compartments. The tray is sealed by one piece of plastic which can be peeled off prior to consumption. One compartment of the container contains one product and the second compartment contains another product. There are two different types of product which are going to be supplied. Each Product contains only one type of product. You have provided the proposed labels and packaging for the Products. The Products are required to be refrigerated and consumed within 5 days of opening. The Products are intended to be eaten as an on the go snack and they are being marketed as such. The Products will be sold in retail supermarkets alongside ready-to-go snack products.

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: The supply of the Products is a GST-free supply 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 under 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. | Detailed Reasoning - 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 (paragraph 38-4(1)(a) of the GST Act). The Products are food for human consumption, and therefore, satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act. However, 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 specified in Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind specified in Schedule 1. As the products contain more than one type of food, we have to consider whether each food item in the product is food of a kind specified in Schedule 1. If one of the food items is of a kind specified in Schedule 1, then we need to determine whether the product is a supply of a combination of foods to which paragraph 38-3(1)(c) of the GST Act applies or a mixed supply of GST-free and taxable food. | Detailed Reasoning - Detailed Food List: The Goods and Services Tax Industry Issues Detailed Food List (DFL) is a public ruling outlining the ATO view on the GST treatment of various food items. Product 1 Product 1 is listed as an item which is GST-free on the basis that it is food for human consumption that is not of a kind specified in Schedule 1 of the GST Act and therefore it is not excluded from being GST-free by section 38-3 of the GST Act. Product 2 Product 2 is also listed in the DFL as GST-free on the basis that they are food for human consumption that is not of a kind specified in Schedule 1 of the GST Act. As such Product 2 is food of a kind specified in Schedule 1 and are therefore not excluded from being GST-free by section 38-3 of the GST Act. Product 2 are a GST-free food under section 38-2 of the GST Act. As the individual components are GST-free we are not required to apply either the composite supply or mixed-supply rules. Accordingly,the supply of the Products by you is a GST-free supply under section 38-2 of the GST Act.