Private ruling: Goods and Services Tax (GST) and food classification of products
Date of advice: 3 December 2019
Published: February 2020

Ruling: Q1: Is your supply of gelato and sorbet products (the Products) a taxable supply? | A1: Yes, your supply of the Products is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore, subject to GST.

Relevant facts and circumstances: You are registered for GST. You sell gelato and sorbet products (the Products) to the public out of your shopfront. The Products are sold frozen and intended to be consumed frozen. The Products are sold per scoop in cones or cups and in tubs to local customers. Occasionally you sell the Products to cafes and restaurants. The Products are not intended for consumption on the premises. You market the Products on your website, Facebook and Instagram as well as a couple of sandwich boards that are placed outside your premises when open. You provided details of the Products and their ingredients.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 38-2 | 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 paragraph 38-4(1)(a)

Reasons for decision: Summary: Your supply of gelato and sorbet products (the Products) is a supply of a food of a kind covered under item 29 in the table in clause 1 of Schedule 1 to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore is not a GST-free supply. The supply of the Products is a taxable supply and subject to GST. | 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. The term 'food' is defined in section 38-4 of the GST Act to include food for human consumption (whether or not requiring processing or treatment) (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. It is necessary next to consider whether the Products fall within any of the exclusions in section 38-3 of the GST Act. Subsection 38-3(1) of the GST Act excludes certain foods from being GST-free. These include: (a) food for consumption on the premises from which it is supplied;... (c) food of a kind specified in the third column of the table in clause 1 of Schedule 1; or food that is a combination of one or more foods at least one of which is food of such a kind;... Paragraph 38-3(1)(a) of the GST Act provides that a supply of food for consumption on the premises from which it is supplied is not GST-free. You advised that the Products are not for consumption on the premises from which they are supplied. Therefore, the exclusion in paragraph 38-3(1)(a) of the GST Act does not apply. Paragraph 38-3(1)(c) of the GST Act provides that food of a kind specified in the third column of the table in clause 1 of Schedule 1 to the GST Act (Schedule 1), or food that is a combination of one or more foods at least one of which is food of such a kind, is not GST-free. The food category in Schedule 1 that is of particular relevance is 'Ice-cream food' which specifies that the following products are not GST-free: | Detailed Reasoning - Food: 28 Ice-cream food ice-cream, ice-cream cakes, ice-creams and ice-cream substitutes 29 frozen confectionery, frozen yoghurt and frozen fruit products (but not frozen whole fruit) 30 flavoured iceblocks (whether or not marketed in a frozen state) 31 any * food similar to food listed in items 28 to 30 Further, the Detailed Food List , which is a public ruling, provides details of the GST status of major food and beverage product lines. In relation to GST status of gelato and sorbet the Detailed Food List states: | Detailed Reasoning - Notes: gelato and similar frozen confectionery taxable Schedule 1, item 29 of the GST Act applies. Sorbet taxable Schedule 1, item 29 of the GST Act applies. Item 29 of Schedule 1 (item 29) specifies frozen confectionery, frozen yoghurt and frozen fruit (but not frozen whole fruit). These food products are intended for consumption as frozen or soft served foods. The Products at issue are not frozen whole fruit. Taking into account the ingredients of the Products and the fact that the Products are intended to be consumed frozen, we consider that the Products are food of a kind similar to those foods described in item 29, being frozen confectionary and frozen fruit products. As the Products are covered by item 29, they are excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. The supply of the Products therefore is a taxable supply and subject to GST.