Private ruling: Goods and Services Tax (GST) classification of a food item
Published: July 2012

Ruling: Q1: Is the supply of a frozen filo product that has a dessert filling GST-free? | A1: No.

Relevant facts and circumstances: You are registered for goods and services tax (GST). You are an importer that sells food products on a wholesale basis. You have previously requested a GST private ruling on the supply of a product. The product has a dessert filling surrounded by filo pastry. The product comes in different varieties of sweet filling. The product is sold in a frozen state. It is not consumed from the premises that you supply it from. The cooking instructions state that the product should be deep fried from the frozen state.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Subdivision 38-A

Reasons for decision: Summary: The supplies of all varieties of the product are food that is not GST-free under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The products are 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)(c) of the GST Act). | Detailed Reasoning - Detailed reasoning: Subsection 7-1(1) of the GST Act provides that GST is payable on any taxable supplies. Section 9-5 of the GST Act states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or input taxed. (* denotes a defined term in section 195-1 of the GST Act). For the supply of your product to be a taxable supply, all of the requirements listed in section 9-5 of the GST Act must be satisfied. Based on the information provided, you have satisfied the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act as follows: · the supply of the product is for consideration · the supply of the product is made in the course of the business that you carry on · the supply is connected with Australia as your business is located in Australia, and · you are registered for GST. Therefore, the supply of the product will be taxable to the extent that it is not input taxed or GST-free. There is no provision for the supply of food to be input taxed other than section 40-130 of the GST Act which allows a non profit body to elect to treat its supplies of food made at certain school tuckshops and canteens as being input taxed. As this exception does not apply to you, then what remains to be considered is whether the supply of the product is GST-free. You have described the product as being a spring roll and declare that this type of food is listed in the GST Food guide as being GST-free. The Macquarie Dictionary defines a spring roll to be "a Chinese delicacy consisting of a savoury filling wrapped in thin dough and deep fried." While your product is deep fried, we do not consider it to be a spring roll as it does not contain a savoury filling. This view is supported by your marketing literature that describes the product as being a dessert product. A supply of food is GST-free in accordance with section 38-2 of the GST Act if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in section 38-3 of the GST Act. 'Food' is defined in paragraph 38-4(1)(a) of the GST Act to include 'food for human consumption (whether or not requiring processing or treatment)'. 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 will not be GST-free if it is food of a kind that is 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. As such, the issue in this case is whether it is 'food of a kind' specified in Schedule 1. The phrase 'food of a kind' is not defined in the GST Act. However, the words 'of a kind' and their meanings were considered in Hygienic Lily Ltd v. Deputy Commissioner of Taxation (NSW) (1987) 13 FCR 399. Accordingly, it is considered that food will be 'food of a kind' listed in Schedule 1 if it is food belonging to the same class or genus as food listed in Schedule 1. Our previous decision turned on the fact that your products are specified as being for deep frying, rather than for baking. We considered that in order for the product to belong to the same class of food as those listed under item 22 or 23 the item needed to be baked. This decision was made in error. While the items 20-27 are listed under the category of 'bakery products' in the second column in the table in clause 1 of Schedule 1, this column of the table is not operative but rather serves to explain the underlying purpose of the provision (sections 182-10 and 182-15 of the GST Act). It is clear from an analysis of the foods listed in this category that not all are baked. For example, some slices and cheesecakes are not cooked at all. Pancakes, waffles and crepes are normally cooked in a pan or a griddle rather than baked. Doughnuts are often fried rather than baked. We therefore consider that the method of cooking is not the most relevant consideration in determining whether food is of a kind specified in the third column of the table in clause 1 of schedule 1. This is emphasised by clause 2 of the Schedule, which specifies that for the purpose of determining whether particular food is covered by any of the items in the table relating to categories of food that are not GST-free it does not matter whether the food is supplied hot or cold, or requires cooking, heating, thawing or chilling prior to consumption. Your products are filo pastry shells filled with a sweet filling. The Macquarie dictionary defines a pastry as: 1. food made of paste or dough, as the crust of pies, etc. 2. articles of food of which such paste forms an essential part, as pies, tarts, etc. As your product is made with an outer shell of pastry encasing a filling we consider your product to be a type or kind of pastry within this definition. As pastries are specified in item 23 of the table your product is therefore food of a kind specified in Schedule 1. Therefore under paragraph 38-3(1)(c) of the GST Act it is a food that is not GST-free. As the food is not GST-free you will make taxable supplies when you sell the product. This ruling replaces the previous ruling issued to you in relation to this product. The previous ruling is withdrawn by the issue of this ruling. However, you are not required to alter your treatment of the product under the previous ruling. You may also continue to rely on that previous ruling for a changeover period of up to 30 days from the date of this ruling. If you consider you need longer than 30 days to enable the changeover, please contact us providing the reasons for the longer period. After that time you are not obliged to follow this ruling. However, if you choose not to follow this ruling you do not have the protection that a private ruling provides in relation to GST liabilities (protection against shortfall and penalties).

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