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 powdered pudding mix?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies powdered pudding mix.
Facts
The entity is a food supplier. The entity supplies powdered pudding mix. The pudding is not ready for consumption until water has been added.
The entity is registered for goods and services tax (GST).
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 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 ingredients for food for human consumption (paragraph 38-4(1)(b) of the GST Act). The powdered pudding mix requires water to be added before it can be consumed. Therefore, powdered pudding mix is an ingredient for food for human consumption that satisfies the definition of food contained in paragraph 38-4(1)(b) 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).
Item 20 in Schedule 1 (Item 20) lists cakes, slices, cheesecakes, pancakes, waffles, crepes, muffins and puddings.
All of the products listed in Item 20 are bakery products that are ready for consumption. Powdered pudding mix is an ingredient used to make a pudding and the product is not ready to be consumed until water has been added. Powdered pudding is not a pudding in itself, but rather an ingredient that is used to make a pudding. As such, powdered pudding mix is not covered by Item 20 and therefore, is not food of a kind listed in Schedule 1.
In addition, the supply of powdered pudding mix does not fall within any of the other exclusions in section 38-3 of the GST Act.
Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies powdered pudding mix.