Private ruling: GST and buns
Date of advice: 6 August 2015
Published: August 2015

Ruling: Q1: Is the supply of buns containing confectionery with fruit centres (CFCs) a GST-free supply of food for the purposes of section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: You manufacture buns that contain CFCs. CFCs are mixed with other ingredients to create the final dough mixture. The CFCs form approximately X% of the final dough mixture. The CFCs are mixed with the dough before baking to produce the final 'CFCs Buns' product.

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 buns containing CFCs is a GST-free supply of food for the purposes of section 38-2 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 (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). Buns containing CFCs are food for human consumption and therefore satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act. However, 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 specified in 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. Item 27 in Schedule 1 (Item 27) lists bread (including buns) with a sweet filling or coating. Buns are generally a fruit bun with a light glaze and a choux paste cross on top. Neither the glaze or choux paste are considered to be a sweet coating for the purposes of Item 27. The buns in question contain CFCs a confectionery item. The CFCs are mixed with the dough ingredients before baking and are considered to be ingredients for the buns. At X% they are a significant, but not overwhelming component of the total and are not regarded as (sweet) fillings. Accordingly, as the buns containing CFCs do not have a sweet filling or coating, they are not food of a kind specified in Item 27, and are not specified in any of the other items in Schedule 1. Furthermore, they are not food that is a combination of one or more foods at least one of which is food of such a kind. Hence CFCs are not excluded from being GST-free by paragraph 38-3(1)(c) of the GST Act. Additionally, the buns containing CFCs are not excluded from being GST-free by virtue of any of the other paragraphs of subsection 38-3(1) of the GST Act. Therefore, they are GST-free under section 38-2 of the GST Act.