Compare documents

ATO ID 2001/672 (Withdrawn)withdrawnchange

GST and gingerbread

Issue

Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it sells gingerbread?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells gingerbread. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a food supplier that sells gingerbread. Gingerbread is a kind of cake, flavoured with ginger and treacle or golden syrup.

The entity is registered for goods and services tax (GST.) The supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for Decision

A supply of food is GST-free under 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 listed 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)'. Gingerbread satisfies the definition of food in section 38-4 of the GST Act because it is food for human consumption.

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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). Item 20 in Schedule 1 (Item 20) relates to 'Bakery products' and is of particular relevance.

Item 20 specifies that cakes, slices, cheesecakes, pancakes and waffles are not GST-free. As gingerbread is a kind of cake, it is considered to be food of a kind specified in Item 20. As such, the entity is not making a GST-free supply under section 38-2 of the GST Act when it sells gingerbread.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it sells gingerbread.

Choose document B