Private ruling: GST and classification of food products
Date of advice: 15 November 2017
Published: January 2018

Ruling: QUESTION AT ISSUE: | Is the supply of various types of salads subject to goods and services tax (GST)? | FACTS: | You operate a retail food store. Your store makes and sells various types of salads. | There are no on-site eating facilities and most buyers would consume their foods either at work or at home. | The salads are sold in small containers. | You advise that the salads are not marketed as a prepared meal | DECISION: | The supply of various types of salads is not subject to GST.



Reasons for decision: Summary: A supply of food is GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if the product satisfies the definition of food in section 38-4 of the GST Act and the supply 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 (whether or not requiring processing or treatment). The salads listed are food for human consumption. 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 the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 4 of Schedule 1 (Item 4) operates to subject to GST, 'food marketed as a prepared meal, but not including soup'. The classification of salads depends on whether they are considered to constitute a 'prepared meal'. The term 'prepared meal' is not defined in the GST Act and will therefore bear its ordinary meaning. The Macquarie Dictionary (1997) (dictionary) defines the term 'meal' as 'the food eaten or served for a repast'. This definition could be applied to a single food item or to a meal consisting of several food items. The dictionary defines 'prepare' in relation to food as 'to get ready for eating, as a meal, by due assembling, dressing or cooking'. Therefore, for food to be regarded as a 'prepared meal' under Item 4, the food needs to be assembled, dressed, cooked or partly cooked. In determining whether food is marketed as a 'prepared meal' the activities of the seller are relevant. Consideration is given to the following: ● the name of the goods; ● the price of the goods; ● the labelling on any containers for the goods; ● literature or instructions packed with the goods; ● how the goods are packaged; ● how the goods are promoted or advertised; and ● how the goods are distributed. Although the salads are duly assembled, dressed and ready for consumption they are not marketed as prepared meals and as such do not fall under Item 4. The salads are not covered by any of the other items in Schedule 1 nor are they excluded by the other paragraphs in section 38-3. As such, the supply of all the salads listed is GST-free under section 38-2. | Detailed Reasoning - LEGAL REFERENCES:: 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)(c). A New Tax System (Goods and Services Tax) Act 1999 section 38-4. A New Tax System (Goods and Services Tax) Act 1999 Schedule 1 clause 1 table item 4.

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.