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 supplies crispy noodles as a savoury snack food?
Decision
No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies crispy noodles as a savoury snack food.
The entity is making a taxable supply under section 9-5 of the GST Act.
Facts
The entity is a food supplier. The entity supplies the crispy noodles as a savoury snack food.
Crispy noodles are made with a pastry using eggs, salt, water and flour as ingredients. The pastry is made into raw noodles. The raw noodles are then fried to achieve a crispy texture.
Once the noodles are fried, they do not require further cooking and are ready to eat.
The entity is registered for goods and services tax (GST) and 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 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 (paragraph 38-4(1)(a) of the GST Act). Crispy noodles 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 a food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).
Item 15 specifies potato crisps, sticks or straws, corn crisps or chips, bacon or pork crackling or prawn chips. Crispy noodles are made from raw noodles that undergo the cooking process of frying. This cooking process results in the noodles having a crispy texture. In addition, the noodles are supplied as a savoury snack food. The crispy noodles share similar characteristics to the foods listed in Item 15. These being that the crispy noodles are supplied as savoury snack foods, have a similar shape to sticks or straws, have undergone a cooking process and have a crispy texture.
Accordingly, the crispy noodles are food of a kind covered by Item 15 and a supply of the crispy noodles is, therefore, excluded from being a GST-free supply by the operation of paragraph 38-3(1)(c) of the GST Act.
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 any other provision of 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 supplies crispy noodles as a savoury snack food.